FTSE JSE Top40 future is pointing to a better start after Friday’s sell-off

03/08/2020 The FTSE JSE Top40 future is pointing to a better start after Friday’s sell-off, up 350 points or 0.7%. Naspers could lend some support, with Tencent up 1.02% in HK as well as rand hedgers on the weaker rand, with banks that could weigh further. US and European Futures are slightly lower this morning.
New-vehicle sales probably fell by 20.1% in July compared with a year ago, slower than the 30.7% decline reported in June, according to the median estimate of five economists surveyed by Bloomberg. The data are published by the National Association of Automobile Manufacturers of South Africa.

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  • South Africa Proposes Extending Virus Tax-Relief Measures
  • South Africa’s Telkom Launches Financial Services Business
  • Calvert Details Proxy Votes for Prosus Aug. 18 Annual Meeting

ECONOMIC DATA

  • 11am: July Absa Manufacturing PMI, est. 52.8, prior 53.9

MARKETS
On Friday the FTSE/JSE Africa All-Share Index closed down 0.2% to 55,721, with banks down 3.95%, weighing the most on a weaker rand. The Rand was down 1.8% to 17.0718 per USD, with the Yield on 10 year govt rand bonds that fell 5.7 bps to 9.252%

EU/UK
On Friday the pan-EuropeanStoxx 600 closed down by nearly 0.9%, registering its first month-to-date drop in four months. In London the FTSE 100 retreated 1.5%, the German Dax gave up 0.54%, with the Paris CAC 40 shedding 1.4%. Airlines and travel-related stocks were some of the worst impacted components of the blue-chip index, with easyJet falling 22% and British Airlines parent IAG down 20% in July. Both companies suffered their worst month since March. It comes amid investor fears over a recent jump in Covid-19 infections across Europe and the subsequent implications for travel. The euro zone economy contracted by 12.1% in the second quarter of 2020, compared to the first three months of the year, according to preliminary data from the region’s statistics office. Friday’s reading is the lowest since records began in 1995. In France, the statistics office said GDP fell by 13.8% in the second quarter of the year, slightly better than estimates, but still the worst on record. On Thursday, the German statistics office announced the German economy contracted by 10.1% in the second quarter — the worst reading since records began in 1970.
U.S.
Stocks wiped out earlier losses and closed higher on Friday as the biggest tech companies and market leaders — Amazon, Apple and Facebook — soared after posting stellar quarterly results. The Dow Jones Industrial Average rose 114 points, or 0.4%, to 26,428, after dropping about 300 points at its low of the day. The S&P 500 climbed 0.7%, while the Nasdaq Composite gained 1.4%, or 157, to 10,745, led by a 10% jump in Apple shares. The major equity averages also wrapped up the month of July with solid gains and posted their fourth straight positive month. The S&P 500 gained 5.5% in July, while the Dow and the Nasdaq Composite rose 2.3% and 6.8%, respectively. Still, a few negative headlines capped the gains in the broader market on Friday: Emergency unemployment benefits are set to expire Friday and Congress and the White House still seem far apart on an agreement. White House Chief of staff Mark Meadows said Democratic leaders have rejected four offers regarding the coronavirus relief bill. Dow-component Chevron fell 2.7% after the oil giant reported an $8.3 billion loss in the second quarter as the pandemic “significantly reduced demand.” Consumer sentiment deteriorated this month amid a resurgence in new coronavirus cases.
ASIA
Asian stocks started August in a mixed fashion amid a resurgence in Covid-19 cases and simmering U.S.-China tension. Treasuries slipped. Shares advanced in Japan and China but declined in Hong Kong. Australia’s and South Korea’s stocks fluctuated. The Nikkei is up 2.2%, the Hang Seng down 0.81% (Tencent +0.56%) and the Shanghai higher +1.4%. In OZ the ASX 200 is flat, with the metals & mining index up 1.6%. Victoria state tightened restrictions as cases jumped, while the Philippines imposed a stricter lockdown for Manila and nearby areas. Stocks in Manila had the biggest drop in Asia, down more than 3%. Tension between the U.S. and China is another threat to risk appetite. The Trump administration will announce measures shortly against “a broad array” of Chinese-owned software deemed to pose national-security risks, U.S. Secretary of State Michael Pompeo said.

COMMODITIES
Oil edged lower near $40 a barrel in New York as OPEC and allied producers started supplying more crude to a global market where many countries are still struggling to contain the coronavirus. OPEC+ will pump about 1.5 million barrels more this month than in July as it starts to unwind its historic virus-driven output curbs, with Russia already having lifted its output slightly last month.
Gold’s spot and futures prices opened the week by hitting records, with metal for immediate delivery closing in on $2,000 an ounce as the search for haven assets continued amid the coronavirus pandemic. Spot bullion surged 11% in July, the biggest monthly gain since 2012, as investors weighed a weaker dollar and record low U.S. real yields. Strategists are now considering alternatives to government debt, such as cash, credit, dividend shares and gold.