Silver Rockets Higher, Gold Nears Record in Flight to Havens

22/07/2020

The Local market had a 1000 point swing from top left to bottom right as early solid gains drifted away, the JSE AllShare closed 0.28% higher after been up 2 % early in the session. Naspers led the way up 4.20% after Tencent shot the lights out in Hong Kong. Gold stocks will be the feature again as Gold trades at nine year highs at $ 1857 an ounce and Silver surges to highest levels since 2013. Ex dividends today include, AFH 12c regular and 50c special cash and TFG ex rights 2 per 5. We expect the JSE to open mixed to a little lower with Tencent down 1.33% and World markets mixed, the ZAR is still firm at 16.40 vs the US Dollar and 20.86/GBP.

South Africa’s May retail sales figures, due to be published at 1pm, are expected to show a 15.6 decline on a constant year-on-year basis.

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ECONOMIC DATA:

  • 1pm: (SA) Retail Sales YoY April Survey -31.9% Prior 2.7%
  • 1pm: (SA) Retail Sales MoM April Survey -33.0% Prior 2.3%
  • 1pm: (SA) May Retail Sales Constant YoY, est. -15.6%
  • 1pm: (SA) May Retail Sales MoM, est. 27.6%

Overnight, the Dow climbed more than 150 points, after rising more than 300 points at its high of the day. Chevron and Exxon Mobil fueled the 30-stock index, gaining about 7% and 5%, respectively, as oil rose to its highest level since March. The S&P 500 closed in positive territory with a modest gain of 0.2%. The Nasdaq underperformed, dipping 0.8% as Facebook, Amazon Apple, Netflix and Google-parent Alphabet all closed lower. Earnings season continues with reports from Microsoft, Tesla, Chipotle Mexican Grill, CSX and Las Vegas Sands after the closing bell. All eyes will be on Tesla’s earnings, which could make the company qualify to become a S&P 500 constituent. Existing home sales for June will be released at 10:00 a.m. Eastern time, economists are expecting a rebound to 4.73 million sales. 

Chart of the percent change in the Dow Jones Industrial Average for ten trading days ending July 21, 2020.

European markets close higher after EU leaders reach recovery fund deal, EU leaders have reached a deal on a 750 billion euro recovery fund to help the region recover from the coronavirus crisis. The pan-European Stoxx 600 closed 0.3% higher, paring back gains somewhat from earlier in the session. Major corporate earnings came thick and fast yesterday, with UBS announcing a net profit of $1.23 billion for the second quarter of 2020, down 11% from the same period last year ($1.4 billion). Analysts polled by the Swiss lender had expected a net profit of $973 million. Swiss drugmaker Novartis cut its 2020 sales outlook after reporting a fall in second-quarter profit and sales, with net income dropping 4% to $1.9 billion from $2.1 billion during the same period in 2019 and Swedish automaker Volvo swung to a first-half operating loss but said it expects businesses to recover as countries emerge from lockdown measures, having seen a strong rebound in China since the economy reopened. FTSE + 0.13%, CAC + 0.22%, DAX + 0.96%.

Asia is softer across the region with Mainland China bucking the trend, the Shanghai Comp is up 1.16% and the CSI 300 + 1.32%, Hong Kong is lower down 0.20% with Tencent down 1.33%. Australia closed lower, with the S&P/ASX 200 down 1.46%. Australia’s retail sales climbed 2.4% in June as its economy continued to reopen, that follows a record 16.9% surge in the previous month. Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.17% in the afternoon.

Gold soared to yet another nine year high propelled by a softer U.S. dollar and expectation of more stimulus measures to resuscitate pandemic-hit economies which could stoke inflation. Gold is up 0.83% at $ 1857 an ounce, Silver jumped 5.4% to $22.48 per ounce, palladium flat at $ 2145 and platinum down 0.32% at $879.

Oil prices have drifted lower as industry data showed a bigger-than-expected inventory build in the United States where coronavirus cases continue to climb, potentially further denting demand in the world’s biggest oil consumer. OIL came off its highest level since March the 6th with Brent down 0.77% at $ 43.99 and WTI down 0.88% at $ 41.55.

Have a great day and stay safe.

Regards