Dow drops 130 points | Tech sell-off resumes

18/09/2020 Markets were all lower across the globe yesterday as investors look for the next catalyst to reignite a rally. The dollar steadied after declines, with U.S. and European futures edging lower. Equities in Asia are mixed to slightly higher this morning, with Tencent trading 1.3% lower in HK, after a report the Trump administration has asked gaming companies to hand over information about their data-security protocols involving the Chinese tech giant. The JSE Top 40 futures indicating a lower start, down 142 points, or 0.2%.
Locally the FTSE/JSE Africa All-Share Index closed down 1.7% to 55,035, with gold and platinum weighing the most, down 6.3% and 4.9% respectively. Banks were flat with retailers slightly higher, supported by a 6.5% gain in WHL after reporting results. The Rand was up 0.2% to 16.22 vs the USD after the SARB left interest rates unchanged, with the Yield on 10 year govt rand bonds that fell 4.6 bps to 9.182%.
The South African Reserve Bank left its benchmark interest rate unchanged, ending its easing cycle even as it now sees the economy contracting more than it projected in July and inflation remaining well inside its target band.

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EARNINGS:

  • Caxton and CTP Publishers and Printers (CAT SJ)

ECONOMIC DATA

  • 9am: (SA) Bloomberg Sept. South Africa Economic Survey
    EU/UK
    European stocks retreated yesterday as investors around the world reacted to a host of central bank meetings in recent days. The pan-European Stoxx 600 dropped 0.4% by the close, banks falling 1.5% to lead losses as almost all sectors and major bourses slid into the red. London’s FTSE100 ended the session down 0.47%, with Paris’ CAC-40 losing 0.69%, while the German DAX saw the session out 0.36% lower. The Bank of England on Thursday left interest rates unchanged and maintained its current level of asset purchases, but warned that the outlook for the economy remains “unusually uncertain.” The Bank also revealed that the Monetary Policy Committee had been briefed on plans to explore how a negative bank rate could be implemented effectively, meaning the BOE is now openly considering how to use negative interest rates. In terms of individual share price action, Grenke rallied 33% to lead the Stoxx 600, rebounding from a heavy week of losses after issuing a firm denial of fraud allegations by short-seller Viceroy Research. Grenke also revealed it is considering legal action against Viceroy. IG Group shares jumped more than 6% after the online trading platform recorded a spike in revenues for the first quarter.
    US
    Stocks fell in volatile trading last night amid renewed pressure in shares of major tech companies. Conflicting messaging on the coronavirus vaccine front and uncertainty around further stimulus also weighed on sentiment. The Dow Jones slid 130 points, or 0.5%, to 27,901, snapping a four-day winning streak. The 30-stock average fell as much as 384 points, while briefly turning positive during the wild session. The S&P 500 dropped 0.8%, or 28.48 points, to 3,357, with the Nasdaq Composite that fell 1.3%, to 10,910. The tech-heavy benchmark briefly dipped back into correction territory, down 10% from its all-time high. Facebook and Amazon were down 3.3% and 2.3%, respectively. Netflix closed 2.8% lower. Alphabet dropped 1.7% while Apple and Microsoft were both down at least 1%. Snowflake, an IPO which captivated Wall Street on Wednesday as it doubled in its debut, was off by 10.4%.
    ASIA
    Stocks in Asia are mixed this morning though remained on course to climb for the first week in September. Declines at Tencent Holdings Ltd. weighed on Hong Kong’s stock market after a report the Trump administration has asked gaming companies to hand over information about their data- security protocols involving the Chinese tech giant. Shares in Shanghai and Tokyo edged up, while those in Seoul traded flat. South Korea’s won outperformed among emerging-market currencies, trading at an eight-month high The Nikkei is up 0.18%, the Hang Seng up 0.55% (Tencent down 0.65%) with the Shanghai gaining 1.7%. In OZ the ASX 200 trades 0.32% lower, with the Metals & Mining Index up 1.2%. The Bank of Japan kept monetary policy steady on Thursday. In its monetary policy statement, the BOJ said the Japanese economy has started to pick up but remained in “a severe situation” due to the impact of the coronavirus pandemic at home and abroad.

COMMODITIES
West Texas Intermediate crude was up 0.3% at $41.11 a barrel and up about 10% for the week with Saudi Arabia ratcheting up the pressure on OPEC+ members to adhere to the group’s production cuts amid signs demand is faltering, with Gold at $1,951.91 an ounce, up 0.4%.

Wishing You All A Good Day Ahead and an even better weekend