Asian Shares Mixed As Market Participants Weigh Risks Posed By Omicron

30/11/2021 Asian shares were mixed this morning as investors continued to cautiously weigh damage the new omicron coronavirus variant may unleash on the global economy. Australian shares outperformed, while stocks in Japan gained. Markets in China retreated, alongside Hong Kong underperforming. Tencent dropping 1.60%. MSCI’s broadest index of Asia-Pacific shares ex. Japan steady 0.11%. Activity in China’s service sector, non-manufacturing PMI, fell to 52.3 in November from 52.4 in October. Some investors are still treading carefully about the impact Omicron could have in disrupting trade, travel and economic activity. Both U.S futures and European futures climbed.

The yield on benchmark 10-year Treasury notes was at 1.5192% compared with its U.S. close of 1.529% on Monday.
Gold eased 0.25% to $1,789.14 per ounce, while U.S. crude jumped 0.99 to $70.63 a barrel. Brent crude rose to $73.88 per barrel.

Some key events to watch this week:
• Federal Reserve Chair Jerome Powell will appear at a Senate Banking Committee hearing alongside Treasury Secretary Janet Yellen on Tuesday. They’re set to speak again on the following day at the House Financial Services Committee.
• Euro zone CPI, Tuesday
• U.S. Conference Board consumer confidence, Tuesday
• China Caixin manufacturing PMI, Wednesday
• Euro zone manufacturing PMI, Wednesday
• U.S. construction spending, ISM Manufacturing, Fed’s Beige Book on Wednesday
• OPEC, allies may re-evaluate plans for reviving oil supplies, Thursday
• U.S. initial jobless claims, Thursday
• U.S. jobs report, factory orders, durable goods on Friday

The so-called fear-gauge, voaltility index, traded as low as 21.71 after nearly breaking the 29 level on Friday.

LOCAL
The JSE firmed up 2.03% to 70,008 points, while the Top-40 added 1.91% on Monday . The rand recovered a fair portion of Friday’s losses when global markets slumped on concerns about the new Covid-19 variant. Banks rose 3.92%, and financials 3.61%. Implats submitted a revised offer of R43bn for Royal Bafokeng Platinum. The latter jumped 16.5% to R141, with Implats following the lead at 6.0% to R191.24. Rand steady at R16.12, with Top-40 futures firm +50points.

NEWS:
• Doctor Who Saw Omicron Early Says Symptoms Milder Than Delta
• South African Fuel Prices to Rise Across the Board From Dec. 1
• Implats Renews RBPlat Bid, Valueing Miner at $2.7 Billion
• Omicron May Fuel Surges, WHO Warns Amid Transmission Concern
EQUITY PREVIEW:
• Aspen in Talks to Produce, sell Covid-19 Vaccine in Africa
• Absa Group Tier 1 Capital at 14.2% by End September
• Angola Sees De Beers Return to Diamond Sector: Jornal de Angola
• Growthpoint Raised to Overweight at Nedbank CIB; PT 14 rand
• Standard Bank Lending, Transactional Activity Gaining Momentum
EARNINGS:
• Vukile Property Fund Ltd. (VKE SJ)
ECONOMIC DATA:
• 8am: Oct. Private Sector Credit YoY, est. 1.75%, prior 1.60%
• 8am: Oct. Money Supply M3 YoY, est. 4.13%, prior 4.01%
• 10am: Sept. Tourism and Migration
• 11:30am: 3Q South Africa Unemployment, prior 34.4%
• 2pm: Oct. Trade Balance Rand, est. 23b, prior 22.2b
• 2pm: Oct. Monthly Budget Balance, est. -33b, prior -7.3b

UK/EU/US
European shares staged a comeback at the beginning of the week, on Monday, after their worst selloff on Friday as investors awaited clues on whether the Omicron variant of coronavirus would hamper economic recoveries and monetary tightening plans by central banks. The pan-European STOXX 600 ended up 0.7%, logging its best day in a month and recovering some of Friday’s 3.7%. FTSE 100 advanced 0.94%, DAX gained 0.16%, alongside the CAC-40 charging up 0.54% on the upside. Travel and leisure stocks rose, with:- Lufthansa, Ryanair and Carnival all rising between 1% and 5.5% after double-digit falls on Friday on fears of renewed travel restrictions. The BoE maybe forced to rethink monetary tightening next month. European futures: FTSE100 currently +26 points, DAX futures +56.5 points

Wall Street closed higher on Monday following Friday’s omicron variant-fuelled selloff. The Dow Jones was up 0.68%, the S&P 500 gained 1.32% and the Nasdaq Composite saw out the session 1.88% stronger. Stock futures extended gains as virus fears ease:- Dow futures 0.21% firm, S%P futures 0.11% in the green, Nasdaq futures firm 0.10%. Market participants were heartened by remarks from the White House, when President Joe Biden said the newly discovered Omicron coronavirus variant was “not a cause for panic”. Prospects that widespread lockdowns would likely not come to the U.S. in the face of the latest variant helped fuel a broad risk-on rally.

ASIA
China’s factory activity unexpectedly picked up in November, growing for the first time in three months as the crippling surge in raw material prices and power rationing eased, taking some pressure off the manufacturing sector.
The official manufacturing PMI rose to 50.1 in November from 49.2 in October. Shanghai Composite index up 0.23%, while the blue-chip CSI300 slid 0.25%.

Japan’s industrial output rose in October for the first time in four months as re-opening of Asian factories eased supply constraints for automakers, offering some hope for the export-reliant economy as it struggles to mount a solid recovery. Factory output grew 1.1% from the previous month in October, marking the first increase since June. Japan’s Nikkei 0.47% firm

Australia’s Private Sector Credit extension slowed down 0.5% in November, from 0.60% in October. The S&P/ASX200 advanced 0.74%, led by real estate, financials and technology stocks. Hong Kong’s Hang Seng eased 0.33%