Tencent down 5% in HK

24/07/2020

We are in for a weaker start with the FTSE JSE Top40 future down 590 points or 1.1%, Naspers could further weigh, with Tencent down 5% in HK. Asian markets are under pressure this morning with US and European Futures all lower amid concern over escalating Sino-U.S. tensions as  China ordered the U.S. to shut a consulate in a tit-for-tat retaliation. That follows Washington forcing China to leave its mission in Houston earlier this week.

The South African Reserve Bank cut its key interest rate for a fifth time in as many meetings and tempered expectations for further aggressive easing, even as it forecast the economy will contract even more this year and inflation will stay muted.

* (NY1 SJ): South Africa’s Fifth Rate Cut May Signal Bottom of Cycle Near
* Eskom Seeks Advisers on Break-Up Plan, Raising Green Finance
* South African Airways Administrators Call Creditor Meeting

EARNINGS:

WHL SJ; Trading update for the 52 weeks ended 28 June 2020

*WOOLWORTHS 52 WEEKS GROUP SALES 0.1% LOWER Y/Y and down 1.1% in constant currency terms.


MTN Trading statement for the six-month period ended 30 June 2020
*MTN GROUP SEES 1H HEADLINE EPS AT LEAST 100% HIGHER Y/Y
*MTN GROUP INCREASE IN 1H HEPS OF AT LEAST 100%
*MTN GROUP INCREASE IN 1H EPS OF AT LEAST 140%



MARKETS
Yesterday the FTSE/JSE Africa All-Share Index closed up 0.4% to 56,070, mainly driven by Golds and Platinum counters with the indexes gaining 3.2% & 4.6% respectively. Banks and Retailers were the main losers on the back of a weaker rand after the announcement of a 25bps rate cut. The Rand was down 0.4% to 16.55 per US$ and is currently weakening further last at 16.67, with the Yield on 10 year govt rand bonds that fell 8.6 bps to 9.121%.

EU/UK

The pan-European Stoxx 600 closed marginally higher +0.06%, with sectors and major bourses pointing in opposite directions as tensions between China and the US escalated this week. In London the FTSE 100 closed up a marginal 0.07%, the German Dax gave up 0.01%, with the Paris CAC 40 closing down 0.07%. In terms of individual share price action, Finnish biofuel producer Neste rallied more than 11% after reporting a smaller-than-expected 31% fall in second-quarter profit. Publicis Groupe shares also climbed 8% after the French advertising company beat profit expectations. At the other end of the European blue chip index, British derivatives trading provider IG Group fell 11%. The company flagged a return to normal in markets after volatile trading caused profits to surge in the last quarter.

U.S.

Stocks fell in volatile trading last night as Microsoft and Apple led the broader market lower and traders pored through disappointing unemployment data. The Dow Jones Industrial Average dropped 353 points, or 1.3%, to 26,652. The S&P 500 slid 1.2%, snapping a four-day winning streak. The Nasdaq Composite fell 2.2%, or 244.71 points, to 10,461 as the sell-off in major technology companies deepened. Microsoft shares slipped 4.3% despite reporting better-than-expected earnings for the previous quarter. Though the company’s results were largely positive, Microsoft said its transactional license purchasing continued to slow and that subsidiary LinkedIn was negatively impacted by the weak job market. Apple traded 4.5% lower, while Amazon and Netflix dropped 3.6% and 2.5%, respectively. Tesla, meanwhile, gave back its earlier gains and fell nearly 5% despite reporting earnings that blew past analyst expectations. Elon Musk’s automaker also said it’s set “for a successful second half” and reiterated its goal of delivering 500,000 vehicles this year. The S&P 500 “is getting hit very hard as investors sell out of tech, a group that came into the CQ2 reporting season with impossibly high expectations,” Adam Crisafulli of Vital Knowledge, said in a note on Thursday. “Tech stocks were simply wildly overbought, overowned, and overvalued, and there probably wasn’t anything they could have done differently with earnings to spur further gains.”

ASIA
Stocks in Asia retreated along with U.S. and European equity futures amid concern over escalating Sino-U.S. tensions and worries the recovery in the world’s largest economy has stalled. Shares in China bore the brunt of losses and the offshore yuan slid as China ordered the U.S. to shut a consulate in a tit-for-tat retaliation. Equities in Hong Kong and Australia were also lower The Hang Seng is down 2.4% (Tencent -4.8%) and the Shanghai is 4.1% lower. In OZ the ASX 200 slid 1.1%, with the metals & mining index down 0.84%. Japan is closed for holidays.

COMMODITIES
Oil held losses near $41 a barrel in New York as signs of weakness in the American labor market cast doubt on the strength of its demand recovery, while U.S.-China relations deteriorated further, with Gold flat at $1,887.60 an ounce. Platinum & Palladium are both lower.

Have a good day