Better start with the Dow that jumped 190 points on Friday and the S&P 500

24/08/2020 We are in for a better start with the Dow that jumped 190 points on Friday and the S&P 500 that closed at another record last week. European and US futures are all higher this morning with stocks in Asia all in the green, led by gains in Hong Kong on signs of a thaw in U.S.-China tensions. Naspers & Prosus should lead gains, with Tencent up 4.2% in HK after the company said it is close to taking Leyou Technologies Holdings Ltd. private in a deal that would value the Chinese gaming firm at about $1.3 billion. The JSE top 40 futures are up 630 points or 1.2%
Absa Group reported net income for the first half of 485 million rand, -94% y/y.

  • 1H adjusted EPS 1.734 rand vs. 9.758 rand y/y
  • 1H revenue 40.36 billion rand, +3.2% y/y
  • 1H Normalized Cost-to-Income Ratio 53.9% vs 56.7% Y/Y
  • Scraps 1H Dividend
  • Long-term growth prospects in South Africa are still poor
  • Net interest margin is still expected to decline noticeably in 2020
  • Customer loan and deposit growth should slow in 2H
  • (BID SJ): BID CORP Trading Statement; SEES FY HEPS B/W 45% & 50% LOWER Y/Y
  • (BLU SJ): S. Africa’s Cell C to Close 128 Retail Stores
  • (RDF SJ): Redefine Signs Non-Binding Pact to Acquire Marki SPV

MARKETS
On Friday the FTSE/JSE Africa All-Share Index closed up 0.6% to 55,949 supported by gains in the banking and retail sectors as the Rand strengthened 0.7% to 17.15 vs the USD, with Gold stocks on the backfoot as risk sentiment returned. The Yield on 10 year govt rand bonds fell 1.0 bps to 9.265%.

EU/UK
The pan-European Stoxx 600 finished the session marginally lower by 0.15%, as most sectors and major bourses sank despite starting the session in positive territory. Euro zone flash PMI (purchasing managers’ index) data published on Friday dented hopes of a V-shaped recovery from the bloc’s deepest economic downturn on record. The August composite reading, widely seen as a strong gauge of economic health, fell to 51.6 from July’s 54.9, considerably below analyst expectations. The U.K.’s August composite PMI came in at 60.3, outstripping expectations of 57.1 and a marked improvement from July’s 57.0. In London the FTSE 100 gave up 0.19%, the German Dax fell 0.51%, with the Paris CAC 40 shedding 0.30%. In terms of individual share price action, Denmark’s Netcompany climbed 9% after Deutsche Bank raised its target price for the stock. At the other end of the European blue chip index, Dutch payment company Adyen dropped 3.7% after several top executives sold their 15% stakes.
U.S.
Stocks rose on Friday, lifted by strong U.S. economic data, to end a week that saw the broader market reach a record level. The Dow Jones Industrial Average finished the session up 190 points at 27,930, a gain of about 0.7%. The S&P 500 advanced 0.34% to 3,397, a new record closing high, with the Nasdaq that climbed 0.4% and ended the day at 11,311, also a record close. Apple shares rose 5.1% to an all-time high, building on this week’s strong gain. Deere and Foot Locker jumped 4.4% and 1.4%, respectively, on better-than-expected quarterly results. Data from IHS Markit showed U.S. manufacturing activity hit its highest level in 19 months in August, while services were at their highest level in 17 months. Meanwhile, existing-home sales for July saw a record month-over-month spike of 24.7%. The average selling price for homes also hit an all-time high, jumping to $304,100.
ASIA
Stocks rose, led by gains in Hong Kong on signs of a thaw in U.S.-China tensions, with investors also looking ahead to a policy speech by Federal Reserve Chair Jerome Powell later in the week. Hong Kong shares climbed more than 1%, aided by a rally in WeChat owner Tencent Holdings Ltd. People familiar with matter said President Donald Trump’s team is privately seeking to reassure U.S. companies that they can still do business with the WeChat messaging app in China. Equities in South Korea, Japan and China were also higher. The Nikkei is up 0.26%, the Hang Seng adding 1.4% (Tencent +4.1%) and the Shanghai gaining 0.31%. In OZ the ASX 200 put on 0.30%, with the metals & mining index up 0.62% .
COMMODITIES
Oil was steady after a third straight weekly gain as the threat of back-to-back storms hitting the U.S. Gulf Coast and disrupting production was offset by signs of a coronavirus resurgence in parts of Asia and Europe. October futures traded near $42 a barrel in New York after falling 1.1% on Friday. Almost 60% of crude output in the U.S. Gulf of Mexico production was closed as of midday Sunday as the region prepared for two approaching hurricanes.
Gold is down this morning continuing a second consecutive week of losses, after the FDA Approves Potential COVID-19 Treatment, with platinum and palladium prices also on the backfoot.