Asian Markets Cheers Wall Street, China Caps Gains

26/10/2021 Stock markets in Asia-pacific region climbed on Tuesday as upbeat Wall Street earnings lifted the broader economic sentiment, though fresh worries about China’s property sector hit Hong Kong and mainland markets. China has said it will roll out a pilot real estate tax in some regions, adding to existing investor concerns about real estate in the mainland. Shares rose in Japan and Australia. MSCI’s gauge of Asia Pacific stocks ex. Japan rose 0.17%. Hang Seng Index and China’s blue-chip CSI300 Index opened higher but fell into negative territory, weighed by property stocks. Tencent on the backfoot 0.60%. Both the Dow Jones Industrials and S&P 500 closed at record highs on Monday. Tesla breached the $1 trillion market capitalisation, having jumped 12.66%, also provided the biggest boost to the S&P 500 and the Nasdaq. Facebook Inc. was higher in late trading on strong user growth and a pledge to buy back as much as $50 billion more in stock. The 10-year U.S. Treasury yield and the dollar edged up. U.S. and European contracts advanced. Gold held above $1,800 an ounce and Bitcoin traded around $62,800. Oil prices took a breather from a recent rally driven by U.S. demand. Brent crude up 11cents, 0.13%, at $86.10, while Texas light-sweet slightly below $84.00.

Here are some events to watch this week:
• Earnings: Amazon, Apple, Microsoft, Twitter, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group
• Australia CPI, Wednesday
• U.S. wholesale inventories, U.S. durable goods, Wednesday
• Bank of Japan monetary policy decision, briefing, Thursday
• ECB rates decision, President Christine Lagarde briefing, Thursday
• U.S. GDP, initial jobless claims, Thursday
• G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday

LOCAL:
The local bourse closed weaker on Monday amid mixed global markets, with a focus on rising covid-19 cases in mainland China, supply chain disruptions and inflation concerns. The All-share index lost 0.1% to 66,980 points and the Top-40 0.13%. Trading volumes have slowed down dramatically since last week, with Monday seeing only R15.1bn traded on the exchange. Industrial metals gained 1.66%, resources 0.77%, financials 0.36% and banks 0.23%. Precious metals fell 1.06% and industrials 0.88%. Rand steady at R14.6900/$ this morning. Top-40 futures +50 points firm on IG markets.

The arms deal corruption case involving former President Jacob Zuma and French company Thales SA resumes at the Pietermaritzburg High Court on Tuesday. The court is expected to deliver judgment in Zuma’s recusal application against prosecutor Billy Downer. The former President laid criminal charges against Downer, accusing him of leaking his medical records.

NEWS:
• Aspen Adds Anesthetics at J&J Vaccine Plant in South Africa
• South Africa Faces Increased Outages Due to Eskom Maintenance
• S. Africa’s Eskom Sees Risk of More Power Cuts Due to Repairs
EQUITY PREVIEW:
• South African Banks, Insurers Rise Amid Rotation Into Financials
• Sibanye in Talks to Buy Brazil’s Santa Rita & Serrote Mines
• Sibanye Weighing Potential Nickel and Copper Acquisitions
• Tullow Oil Names Phuthuma Nhleko as Chairman-Designate
MEDIA SUMMARIES:
• Fin24: Mmusi Maimane has plans to become SA’s first independent candidate to contest a national election
• Daily Maverick: Eswatini opposition rejects King Mswati’s offer of a national dialogue
ECONOMIC DATA:
• 9am: Aug. Leading Indicator, prior 122.0

EU/UK/US
European stock markets closed mixed on Monday, as gains in banks and commodity sectors were offset by losses in industrial stocks. The pan-European Stoxx 600 index was largely unchanged 0.07% to 472.21, alongside the Germany’s Dax advancing 0.36%, and the FTSE100 gaining 0.25%, while the CC-40 retreated 0.31%. Mining and energy stocks rose 1.8% and 1.0%, respectively, boosted by oil prices at multi-year highs and a rebound in copper prices as a drop in Chinese inventories fuelled expectations of more buying. HSBC Holdings gained 1.9% as concerns about pandemic-related bad loans were replaced by a surprise 74% rise in the British bank’s third-quarter profit and $2 billion buyback announcement. Telecom stocks sank 0.9% after BofA Global Research reinstated “underperform” ratings on Nokia and Ericsson on low earnings expectations, and signs that the 5G market had peaked. FST100 futures +10points firm, with DAX contracts also gaining +35points.

Wall Street closed higher on Monday as market participants prepared for a week full of big tech earnings. The Dow was up 0.18% at the close, while the S&P 500 was 0.47% firmer and the Nasdaq Composite saw out the session 0.90% stronger.
Hertz Global Holdings Inc. ordered 100,000 cars from Tesla Inc., which will be delivered over the next 14 months, sending Tesla shares to a fresh record. Tesla Inc.’s value eclipsed $1 trillion Monday afternoon for the first time ever, joining Apple Inc., Microsoft Corp., Alphabet Inc. and Amazon.com Inc. as the only public companies above that level. Nasdaq futures currently 0.52% firm, while both the Dow and S&P500 futures are positively in the green 0.15% and 0.21% respectively.

ASIA
Japan’s Nikkei rallied strongly on Tuesday amid earnings optimism, taking cue from Wall Street gains overnight that rocked the Dow and S&P 500 to record highs. The Nikkei added 1.8% as of the midday break, with heavily weighted names like SoftBank Group rising 2.2%. Australian shares rose, aided by tech stocks , while gains in domestic energy stocks and miners further supported the index. The S&P/ASX 200 index was up 0.21%. Hong Kong’s Hang Seng fell 0.39% while the Shanghai Composite was flat 0.08%. China has reimposed travel restrictions in north-western areas and Beijing to combat outbreaks of the virus that are adding to concerns over a slowing economy.