Global Equities Markets Close Firm On Friday On Stimulus Package Hopes

20/07/2020

Gold +0.28% @ $1808.28 , Platinum -0.39% @ $840.39, ZAR -0.21% @ 16.7295 , Brent -0.67% @ $42.57, WTI -0.69% @ $40.32

On Friday both the JSE/All-share and the Top-40 index closed in the green, firmer 0.33% and 0.30% respectively as EU leaders deliberate over a €750bn Covid-19 rescue package. EU leaders on Saturday extended their summit by an extra day, convinced they were finally closing in on a deal for an unprecedented €1.85 trillion budget and coronavirus recovery fund. The US Congress is expected to debate a new stimulus package this week amid fears that the surge in coronavirus cases could further delay economic recovery as some states go back into lockdown. SARB is expected to announce the repo rate on Thursday, the consensus of economists polled by Bloomberg being 25 basis points cut to 3.50% on the repo – record low. The local currency managed to claw back 0.55% for the week against the US dollar. Yield on 10 year govt rand bonds rose 5.3 bps to 9.426%.

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EU/UK
European markets were mostly higher on Friday as investors monitored the headlines coming out of a three-day European Union leaders’ summit in Brussels. The Netherlands, and other rich states of the EU were against the idea of such a big funds being dished out as grants without any conditions, while Italy would prefer it if a larger portion of grants were issued.  By the end of day’s trading; the European Stoxx 600 modestly gained 0.16%, while the FTSE 100 advanced 0.63% , alongside a gain of 0.35% for the German Dax, although France’s Cac-40 slipped 0.31%. Equities markets in this continent are likely to open softer on Monday morning with the FTSE -7 points and the DAX -15 points, as indicated by IG futures. The four European Union governments – Netherlands, Austria, Denmark and Sweden – are satisfied with 390 billion euros ($450 billion) of the fund being made available as grants with the rest coming as low-interest loans.

US
Wall Street stocks were lower at the open on Friday as shares in Netflix and other tech giants weighed on indices. Netflix reported 2Q earnings that missed expectations, pushing the stock down 6.52% by the close. Amazon retreated by 1.26%, Microsoft dipped 0.51% and Apple slid 0.20%. The Dow gave up almost a quarter-percent, slipping 62 points, or 0.23%. The S&P 500 gained 0.28%, while the Nasdaq managed advance0.28% to 10,503.19. U.S. stock index futures gave up early gains late Sunday as the Dow and S&P 500 look to notch a fourth straight week of gains as earnings season kicks into gear. Dow futures on the back foot 116 points, or -0.44%, while both the S&P 500 and Nasdaq futures are down the same 0.45% on Monday morning

ASIA
Asian markets were downbeat on Monday with oil also soft. Markets await efforts from the EU zone and US to stitch together fiscal stimulus plans to fight the pandemic. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2%, with Australian shares among the biggest losers falling 0.57%, after coronavirus cases in the southeast state of Victoria continued to rise. Japan’s Nikkei flat 0.08% while Hong Kong’s Hang Seng Index inched up 0.1%, with Tencent gaining 0.58%. The Shanghai Composite surged 2.6% .


Oil prices fell on Monday, dismayed by the prospect that a recovery in fuel demand could be derailed by a rise in the pace of coronavirus infections around the world. While fuel demand has recovered from a 30% drop in April after countries around the world imposed strict lockdowns, usage is still below pre-pandemic levels. U.S. retail gasoline demand is falling again as infections rise.