Stocks Dip on Earnings, Fading U.S. Stimulus Hopes

15/10/2020 Asian stocks, U.S. and European futures are all lower this morning as investors weigh earnings reports from American banks and fading chances of a stimulus deal in Washington before next month’s presidential election. On the local front the JSE Allshare gained 0.62% led by the miners with Gold and Plats up 3.32 and 3.24% respectively, SA Inc names were mostly lower with Sasol the biggest loser, down 4.52%. We can look to a lower open this morning on the back the global weakness and Tencent trading 3.16% lower on the Tech sell off overnight.

South African President Cyril Ramaphosa to present an economic recovery plan. The 1pm announcement will include proposals to counter the effects of coronavirus lockdowns, which are expected to result in South Africa’s biggest economic contraction in almost nine decades.

• Northam Weighs Buyout of Black Investors’ $1.8 Billion Stake.
• South African Treasury Requests Budget Delay Over Recovery Plan.
• ZAR/$ 16.55, ZAR/GBP 21.55, Gold $ 18.99, Plat $ 864, Brent $ 43.34, WTI $ 41.06


11:30am: 2Q Non-Farm Payrolls QoQ, prior 0.0%
11:30am: 2Q Non-Farm Payrolls YoY, prior 0.0%

European stocks are expected to open lower Thursday as hopes fade that a U.S. stimulus package will be agreed before the November election, and as restrictions return across Europe due to a surge in coronavirus infections. London’s FTSE is expected to open 33 points lower at 5,902, Germany’s DAX 95 points lower at 12,933, France’s CAC 40 38 points lower at 4,904 and Italy’s FTSE MIB 179 points lower at 19,429, according to IG.
• France Imposes Paris Curfew as Europe Reports Record Infections

The uncertainty surrounding the aid talks led to the market’s second straight daily decline. The Dow slid more than 160 points, or 0.6%. The S&P 500 and Nasdaq Composite pulled back by 0.7% and 0.8%, respectively.
Yesterday the first time since September that the major indexes posted consecutive daily losses. Banking giants Goldman Sachs, Wells Fargo and Bank of America reported their latest quarterly results on Wednesday along with United Airlines. Goldman and Bank of America’s results topped analyst expectations. However, Wells Fargo and United fell short of estimates, leading to a sell-off in the sector. Morgan Stanley reports later today. On the data front, weekly jobless claims numbers are set for release later today along with the latest data on import and export prices.

Asian markets are lower with the Hang Seng and Kospi the biggest losers. Australian bond yields and the local dollar dropped, and stocks pushed higher, after the Reserve Bank of Australia governor said the central bank is considering whether buying longer-dated bonds would spur hiring, the ASX 200 is up 0.5% and Aussie Miners up 1.05%. RIO up 0.99%, BHP + 2.05% and the big one for us to watch, Tencent down 3.16%.
Oil markets climbed for a third day despite a resurgence in Covid-19 infections across Europe potentially denting fuel demand. Prices edged higher on Thursday, extending their 2% gains from the previous session, after data showed U.S. crude stockpiles fell last week, while OPEC and its allies were seen complying with their pact to curb output in September. Brent $ 43.34, WTI $ 41.06.
Gold prices have dipped this morning as the dollar steadied and comments from U.S. Treasury Secretary Steve Mnuchin dashed hopes of a new fiscal stimulus package before the presidential election. Gold, considered a hedge against inflation and currency debasement, has climbed 25% this year amid the unprecedented levels of global stimulus to ease the economic blow from the pandemic. Silver fell 0.9% to $24.07 per ounce, platinum was flat at $857.04, and palladium eased 0.2% to $2,340.06.