Dow snaps 4-day winning streak | Earnings season kicks off | Apple unveils 5G iPhone

14/10/2020 U.S. and European futures are ticking up, with Asian stocks trending lower this morning as the American earnings season began and with no sign of a quick end to the stalemate over U.S. fiscal stimulus. Treasuries and the dollar were steady. Tencent is up 2.5% in HK playing catch up from a tech rally in the US on Monday as trading resumed after closures on Tuesday and as the company is planning to increase its stake in Universal Music Group by a further 10% before the option expires in January. The JSE Top 40 futures are indicating a slightly better start, up 160 points, or 0.31%.

Locally the FTSE/JSE Africa All-Share Index closed down 0.9% to 55,054, weighed down by financials and golds, -3.04% and 2.3% respectively with Naspers and Prosus of the few in the top 40 that ended the day positive. The Rand was up 0.2% to 16.48 vs USD, with the Yield on 10-year govt rand bonds that fell 3.0 bps to 9.41%.
Statistics South Africa will release Aug retail sales data at 1pm. Sales are forecast to have dropped 6.75% year-on-year. In parliament, the Standing Committee on Finance will hold public hearings on the Auditing Profession Amendment Bill; the Special Investigating Unit will brief lawmakers on investigation reports on Eskom; Transnet will brief lawmakers on the impact of Covid-19 on South Africa’s freign and ports opreations. The commission of inquiry into state corruption will hear evidence related to state-owned transport company Transnet

  • South Africa Treasury Requests Postponement of Budget to Oct.28

EARNINGS: (All times Central African Time)

  • Cartrack (CTK SJ)

ECONOMIC DATA (All times Central African Time):

  • 1pm: (SA) Aug. Retail Sales Constant YoY, est. -6.75%, prior -9.0%
  • 1pm: (SA) Aug. Retail Sales MoM, est. 1.9%, prior -1.1%
  • South African Chamber of Commerce & Industry releases its trade-conditions survey for Sept.

EU/UK
European stocks retreated on Tuesday, as investors digested the start of U.S. earnings season, the latest China data and coronavirus developments, with the pan-European Stoxx 600 that ended the day 0.7% lower, with almost all sectors in the red. Telecoms was the only sector to close higher, up around 0.3%. London’s FTSE100 was down 0.53%, with Paris’ CAC-40 losing 0.64%, while the German DAX saw the session out 0.91% lower. On the data front, Germany’s ZEW survey of economic sentiment fell by more than expected in October as the coronavirus pandemic, fractious Brexit negotiations and the U.S. election spiked uncertainty for Europe’s largest economy. Shares of German biotech company Morphosys fell more than 5% after the launch of an offering of convertible bonds, while Rolls-Royce also slid more than 6% following a bond offering. At the top of the European blue chip index, German drug company Ecotec was around 4.8% higher. U.K. Prime Minister Boris Johnson set a deadline of Thursday to thrash out the outline of a European Union trade deal.
US
Stocks fell for the first time in five days on Tuesday as investors grappled with the latest news regarding U.S. coronavirus stimulus and treatments as well as the first batch of corporate earnings. The Dow dropped 157 points, or 0.6%, to 28,679 as Apple shares declined. The S&P 500 slid 0.6% to 3,511, with the Nasdaq that dipped 0.1% to 11,863. The major averages fell to their lows of the day at around 2:30 p.m. ET after U.S. regulators paused Eli Lilly’s late-stage coronavirus trial due to safety concerns. The news follows Johnson & Johnson halting its coronavirus vaccine trial after an “adverse event” was reported. Eli Lilly shares were down 2.9% and J&J slid 2.3%. JPMorgan Chase and Citigroup both reported better-than-expected results for the previous quarter. Dow member Johnson & Johnson posted earnings that beat analyst expectations and raised its full-year profit guidance. Asset-management giant BlackRock saw its shares gain 3.9% after the company reported earnings that beat analyst expectations. BlackRock also said its assets under management grew to $7.81 trillion from $7.32 trillion in the previous quarter. Delta Air Lines reported a wider-than-expected loss for the quarter and revenue down 75% compared with the same quarter last year. Shares fell 2.7%.
ASIA
Asian stocks trended lower this morning as the American earnings season began and with no sign of a quick end to the stalemate over U.S. fiscal stimulus. Hong Kong equities dipped as trading resumed after closures Tuesday due to a tropical storm. China Evergrande Group shares slumped after the embattled developer raised less than anticipated in a share sale. A speech from China President Xi Jinping in Shenzhen on Wednesday where he laid out a broad vision for the region’s growth provided little in the way of market-moving news. Losses were modest across the region, with the Shanghai down 0.52% the Hang Seng slipping 0.12% (Tencent +2.51%) and in OZ the ASX 200 is down 0.27% with the metals and mining index shedding 0.91%.
COMMODITIES
Oil steadied in Asian trading as fading hopes for more fiscal stimulus before the U.S. election offset optimism driven by an increase in Chinese crude imports last month. Futures in New York edged lower toward $40 a barrel after closing up 2% on Tuesday. Gold held a two-day drop as investors weighed the rebound in the U.S. dollar amid uncertainty over further support for the economy. Spot gold +0.1% to $1,893.50/oz after -1.6% on Tuesday. Spot silver -0.1% to $24.12/oz, Platinum +0.5% and palladium +0.7%.
Wishing You All A Good Day Ahead