Asian Shares Upbeat In Start To 2022 U.S. Futures Edge Higher

04/01/2022 Asian stocks firm on Tuesday following Wall Street’s record highs on its first trading day of 2022, even as trading volumes remained light. Japan and Australia advanced as they reopened after the holiday. MSCI’s gauge of Asia Pacific stocks ex. was up 0.77% in the morning sessions. The benchmark U.S. 10-year yields hit a six-week high to yield 1.6384%, with investors expecting a series of interest rate raises this year to combat rising inflation.

OPEC+ is expected to stick to its plans to increase output in February when it meets on Tuesday. Current plans would see it raise its February production target by 400,000 bpd as it has done each month since August, when it began to unwind 5.8 million bpd of remaining cuts. Brent crude steady around $79.21, having gained 0.32%.

Gold prices rebounded after falling more than 1% on Monday as a risk-on rally in equities pressured bullion. Spot Gold gained 0.19% to $1804.95 an ounce Tuesday morning.

What to watch this week:
• FOMC meeting minutes scheduled for release Wednesday
• Fed’s Bullard discusses the U.S. economy and monetary policy in an event on Thursday
• Fed’s Daly discusses monetary policy on a panel Friday
• ECB’s Schnabel speaks on a panel Saturday

Locally, the JSE managed a fractional gain of 0.02% to close at the level 73,722.60. Top-40 slipped 0.04%, dragged down by miners. Karooooo, the holding company for vehicle recovery and fleet management group Cartrack, led the market gains, rising 7.48% to R575. Consumer goods group Libstar came out second best on the day, gaining the most in five weeks, up 4.96% to R6.98. Rand up 0.37%, at R15.8170/$. We looking ahead to a positive start at the opening, Top-40 futures +341 points on IG markets.

NEWS:
• Fires Flare Up Again at South African Parliament in Cape Town
• Art Treasures Safe as South African Parliament Fire Flares
EQUITY PREVIEW:
• Sanlam’s Proposed Acquisition of 22.8% Saham Shares Lapses
MEDIA SUMMARIES:
• Mail & Gaurdian: Urgent high court bid to prevent Zondo handing his report to Ramaphosa
GOVERNMENT:
• A probe into the cause of a fire at South Africa’s parliament continues with a suspect due to appear in Cape Town Magistrates Court

EU/UK/US
European contracts are upbeat this morning, with the DAX futures firm +34 points and the FTSE100 futures advancing +42 points. Daimler Chief Technology Officer Markus Schaefer said the luxury carmaker expects chip supply to remain scarce throughout 2022, particularly in the first half of the year. German November retail sales due at 0700 GMT+2 (0900 local time). Seen -0.3% m/m, -3.1% y/y. German December unemployment rate due at 0855 GMT+2. Change seen at -15k, rate seen at 5.3%

The S&P 500 finished at a fresh record on Monday, kicking off the new year on a high note amid hopes that the global recovery will remain intact despite a surge in Covid-19 cases. The benchmark gauge advanced 0.64%, while the DOW gained 0.60% and Nasdaq saw the session out 1.02% stronger. Shares of Apple Inc. briefly hit a historic $3 trillion market valuation for the first time. Investors bet the iPhone maker will keep launching best-selling products as it explores new markets such as automated cars and virtual reality. U.S stock futures firmly in the green: Dow futures + 0.18%, S&P500 +0.24%, Nasdaq + 0.31%.

ASIA
Finance Minister Shunichi Suzuki and other dignitaries rang a bell at the Tokyo Stock Exchange to herald the opening of trading for 2022. Japan’s benchmark Nikkei 225 jumped 1.8% as markets reopened after the New Year holidays. The U.S. dollar reached its strongest level in nearly five years against the Japanese yen on Tuesday, lifted by a jump in Treasury yields as traders bet on an early Federal Reserve interest rate hike despite surging COVID-19 cases. Australia’s S&P/ASX 200 jumped 1.95% while Hong Kong’s Hang Seng remained flat 0.03%. Shanghai Composite edged down 0.17%.

Investors in financial products issued by China’s Evergrande Group protested outside the cash-strapped company’s offices in Guangzhou on Tuesday, with many worried that their returns would be sacrificed to keep real estate projects afloat.