Asian Markets Mixed, Alibaba Slides, U.S Futures Rise

19/11/2021 Stock markets in Asian were mixed on Friday as disappointing earnings from Alibaba, Chinese e-commerce giant, heightened worries about Beijing’s broad regulatory crackdown and slowing growth in the world’s second-biggest economy. Alibaba slashed its outlook for fiscal 2022 revenue amid its second-quarter results missed expectations due to slowing consumption, increasing competition and a regulatory crackdown. The e-commerce giant’s shares tumbled 10%. Tencent drifting lower 1.50% also. Hong Kong benchmark down sharply, underperforming regional counterparts. Tokyo’s Nikkei outperformed, after Japanese Prime Minister Fumio Kishida announced a fresh stimulus package with spending worth around 56 trillion yen ($490 billion). MSCI’s broadest index of Asia-Pacific ex. Japan off 0.51% and set for a weekly decline of 1.2%.

Overnight, the S&P 500 and Nasdaq notched record closing highs, boosted by upbeat corporate earnings news from companies including Nvidia. Treasury yields edged up and the dollar remained on course for a fourth weekly advance. U.S. stock index futures in a happy moody, advancing across all three main benchmarks. European contracts also looking firm, with FTSE100 futures up +30points and DAX futures in the lead +65 points.

Crude oil pushed higher, Brent gaining 0.65% at $81.77 a barrel, as the wait continues to see if the U.S. will join China in planning to tap strategic reserves. Gold steady at $1,863.63, and Bitcoin extended a slide, dropping to about $56,000. Inflation fears drives up gold, despite the rising dollar and treasury yields.

LOCAL
SARB MP increased the repo rate by 25 basis points to 3.75% on Thursday, with three MPC members voting for an increase and two for the rate to be maintained. The rand weakened to an intraday low of R15.7640/$ levels after the MPC announcement. On Friday morning the local currency pared its losses to R15.63/$. The arguments offered by the majority view on the MPC for raising the repo rate at this stage are not persuasive, as the economy is still recovering from the shocks of the July unrest, load-shedding and the pandemic, with business and consumer confidence remaining weak. A gathering currency crisis in Turkey has driven the lira to a record low after the central bank, facing political pressure, cut rates despite inflation running near 20%.

The local bourse closed weaker, to shed 0.11% to 70,866 points. Top-40 remained flat. Retailers fell 1.25%, precious metals 0.96%, resources 0.8% and industrial metals 0.61%. Banks gained 0.69%, financials 0.54% and industrials 0.19%.

NEWS:
• Standard Bank Backs Underwriter in $258 Million Tongaat Deal
• Investec to Further Reduce Stake in Money Manager Ninety One
• Excess Deaths Climb in S. Africa as Official Covid Deaths Fall
• MTN Group Exits Yemen, Transferring Stake to Zubair Unit
• South Africa’s Energy Ministry Preparing for the End of Coal
EQUITY PREVIEW:
• Netcare Sees FY EPS Rising 83.7% to 101.4%
• South Africa Bank Stocks Climb After Central Bank Hikes Key Rate
• Life Healthcare Rises as Results Show Diagnostics Strength
• Investec to Distribute 15% of Ninety One to Shareholders
• Dis-Chem Rated New Hold at HSBC; PT 36 rand
• Clicks Rated New Buy at HSBC; PT 321 rand
• Woolworths Raised to Overweight at JPMorgan; PT 63 rand
EARNINGS:
• Pepkor Holdings Ltd. (PPH SJ)
CORPORATE EVENTS:
• Annual General Meetings: SOL SJ
• Earnings Calls: PPH SJ

EU/UK/US
European markets ended lower on Thursday, weighed by weakness in commodity-related stocks amid declining oil and metal prices. Looks like weakness in emerging markets is spreading across to their developed peers, with inflation and slowing growth concerns making themselves felt once again. The pan-European Stoxx 600 was down 0.46%, Germany’s DAX drifted lower by 0.18%, France’s CAC 40 gave back 0.21%, while London’s FTSE100 slid 0.48%. GlaxoSmithKline was down 3.01% as it traded without entitlement to the dividend. Shell and BP were lower, falling 1.66% and 1.62% respectively. Speculation rife in the UK over Christmas lockdowns, and such raise risks for stocks.

Wall Street stocks closed mixed as market participants digested this week’s jobless claims figures and updates from Cisco and Macy’s. At the close, the Dow Jones was down 0.17%, while the S&P 500 added 0.34% and the Nasdaq Composite was 0.45% firmer. The number of Americans filing for U.S. state unemployment benefits last week was 268,000, above the 260,000 projected by economists. Analysts noted that while weekly jobless claims came in slightly higher than anticipated, it was still the sixth straight week where new claims have remained below the important 300,000 level. In equities, Macy’s rocketed 21.17% after its third quarter numbers sailed well beyond expectations. Kohl’s, Macy’s rival, was 10.62% firmer after it too beat the Street’s expectations. On the downside, corporate networking name Cisco dropped 5.51% after it served up fresh, but disappointing, guidance to investors.

ASIA
Japan is set to announce a record $490 billion spending package on Friday to cushion the economic blow from the COVID-19 pandemic. This move bucks a global trend towards withdrawing stimulus measures and adding strains to its already tattered finances. Nikkei average is currently 0.50% firm, leading gains in the region. Australia’s benchmark edged up 0.20%, China’s bule-chip CSI300 gaining 0.18%, while Hong Kong dipped 1.80%. Hong Kong shares of Country Garden Services Holding, the property management unit of Chinese developer Country Garden, plunged 16% after it raised HK$8 billion ($1 billion) in a share sale on Thursday.