Stocks Fall, Bonds Climb on U.S.-China Tensions

07/08/2020 On Friday global stocks retreated led by Chinese technology firms after a U.S. move to prohibit transactions related to WeChat, a subsidiary of Tencent Holdings Ltd, stoked tensions. The US President signed executive orders prohibiting U.S. residents from doing any business with WeChat and TikTok, beginning 45 days from yesterday, citing national security risks. JSE/All-share closed flat 0.05% at 57,656.69 points, while the Top-40 firmed 0.13%. Gold miners lost 1.32%, gold pulled back 0.27% this morning at $2057.01. Platinum miners fell 1.47%, financials 0.46% and banks 0.41%. The local currency is on the backfoot 0.60% this morning at 17.5255, having to loose almost 3% in a week, missing out on gold price surge to record highs on Tuesday as the Turkish Lira slumps to record low after that country eased some its currency interventions.

Top-40 (IG): -472 points Gold Spot: -0.22% @$2058.91 Platinum Spot: -2.02% @$963.40 Tencent: -3.96%

• Africa’s Largest Wireless Carrier MTN to Exit Middle East
• MTN SJ: Asset sales in Middle East may raise R25bn, orderly process will start in Syria, Afghanistan and Yemen
• Economic Data: 8am: (SA) July Gross Reserves, est. $53.0b, prior $52.3b; (SA) July Net Reserves, est. $46.3b, prior $45.7b having to lose
• Eskom Pact Won’t Include Pledge to Use State Worker Pensions
• EARNINGS: ANGLOGOLD 1H NET INCOME $421M VS. $114M Y/Y ; CURRO SEES 1H HEPS DOWN 18%-28% ; LEWIS GROUP SEES FY EPS FALLING 30%-42% AS PROVISIONS INCREASE
• CORPORATE EVENTS: Annual general meetings: KIO SJ, LTE SJ
• SARB will publish data on foreign-exchange and gold reserves, as well as the amount of government bonds it purchased in the secondary market in July.

EU/UK
On Thursday London stocks closed in the red after BOE stood pat on interest rates, leaving interest rates at a record low of 0.1% and the asset purchase programme at £745bn as expected, and warned the economic recovery would take longer than expected. The FTSE 100 ended the session down 1.27%, with he DAX in Germany giving up 0.54% and CAC-40 retreating 0.98%. At the moment both the FTSE100 and the DAX are currently on the backfoot 20 points and 36 points respectively, according to IG markets.
US
The Dow closed 185.46 points higher on Thursday after this week’s initial jobless claims report revealed a surprise decline to their lowest level – fell by 249,000 to 1.18m, and a tech rally late in the session gave indices a boost. Despite current Sino-US tensions, tech stocks rallied later in the session with Facebook, Apple, Netflix, Amazon and Microsoft all closing higher. the S&P 500 was 0.64% firmer and the Nasdaq saw out the session 1.00% stronger. US stock index futures slightly lower this morning as investors braced for the results of the July jobs report Friday morning: Dow futures -0.47%, S&P500 -0.46%, while the Nasdaq futures are flat -0.06%

ASIA
Asian shares were mostly lower Friday in lacklustre trading as trade tensions between the U.S. and China offset optimism about more fiscal stimulus for the ailing U.S. economy. China’s largest gaming and social media company shed more than $45 billion of market value after sliding by the most since October 2011 on an intraday basis. Japan’s Nikkei 225 slipped 0.73%, while Australia’s ASX 200 gave up 0.80%. Hong Kong’s Hang Seng slipped 2.2%, while the Shanghai Composite lost 1.87%.

COMMODITIES
Oil was down on Friday morning in Asia as some of the biggest oil producing members of OPEC+ vouched to fully commit to production cuts. WTI futures slid 0.41% to $41.37 and Brent oil futures dropped 0.33% to $44.93.