U.S. futures and Asian stocks that began the week with gains after equities reached fresh highs last week

31/08/2020 We are indicating a flat start, despite U.S. futures and Asian stocks that began the week with gains after equities reached fresh highs last week. The dollar traded near the lowest in more than two years, while the yen pared some of Friday’s climb as Japan looks for a new prime minister. The ZAR is firm last at 16.61 to the USD, with Oil and Gold also better. The FTSE JSE Top 40 futures are up slightly with 62 points.
South Africa’s central bank earlier announced July money-supply and private-sector credit figures that came out lower than previous , while the South African Revenue Services will publish that month’s trade statistics at 2pm.

  • Ramaphosa Considers Cabinet Changes in Bid to Drive Reforms
  • South Africa Prosecutor Plans Arrests in High-Profile Graft Case
  • The ruling African National Congress may hold a media briefing after concluding a meeting of its National Executive Committee at the weekend
  • The commission of inquiry into state corruption will hear evidence relating to allegations against a services company formerly known as Bosasa
  • (SNH GR): Steinhoff Investors Question Fees, Litigation Settlement at AGM

EARNINGS:

  • African Rainbow Minerals (ARI SJ)
    FY Net Rises 12%; Declares Final Div
    FY REV. 12.4B RAND, +29% Y/Y
    FINAL DIV/SHR 7.00 RAND
  • RCL Foods (RCL SJ)
    Revenue up 7.4% to R27,8 billion
  • Earnings before depreciation, amortisation and impairment (EBITDA) up 7.2% to R1 636,0 million
  • Headline earnings per share (HEPS) down 65.7% to 13.0 cents
  • Earnings per share (EPS) down 711.0% to negative 103.0 cents
  • Cash generated by operations up 222.7% to R2 571,4 million
  • Total dividend declared 25.0 cents (June 2019: 25.0 cents)

ECONOMIC DATA (All times Central African Time):

  • (SA) July Money Supply M3 YoY, came out at 10.46%, lower than the prior 11.07%
  • (SA) July Private Sector Credit YoY, came out at 5.12% lower than the est. 5.4%, prior 5.64%
  • 2pm: (SA) July Trade Balance Rand, est. 12.5b, prior 46.6b

MARKETS
The FTSE/JSE Africa All-Share Index closed up 0.5% to 56,869, mostly supported by gains in Naspers and Prosus as well as Bidcorp. Sibanye Stillwater also contributed to the gains after announcing that it will resume paying dividends after a three-year break. The Rand was down 0.8% to 17.00 vs the USD, with the Yield on 10 year govt rand bonds that fell 0.3 bps to 9.309%.

EU/UK
European stocks closed lower Friday as investors digested a major policy shift by the U.S. Federal Reserve and news that Japanese Prime Minister Shinzo Abe is resigning because of health concerns. The pan-European Stoxx 600 closed down 0.52%, with most sectors trading in negative territory. In London the FTSE 100 lost 0.61%, the German Dax shed 0.48%, with the Paris CAC 40 giving up 0.26%. Europe’s banking index, however, rose by more than 1.7%. The reaction comes after comments from Fed Chairman Jerome Powell. He unveiled a major policy change, which suggests that interest rates are likely to remain low for some time. Economic data was also in focus with France’s second-quarter GDP confirmed at -13.8% and household consumption that rose 0.5% in July from the previous month. In Spain, retail sales dropped 3.9% year-on-year in the month of July, a slight improvement from the previous reading. Looking at individual stocks, British Gas owner Centrica rose almost 5% to the top of the pan-European benchmark. It comes despite news that British Gas paid a total of £1.73 million ($2.3 million) for mishandling a change in a top-up provider for prepayment meters, according to Reuters. The energy regulator Ofgem said it had decided not to take formal enforcement action. Rolls-Royce, the engine maker, said it would sell assets in an attempt to raise £2 billion. Shares fell by about 3%. Meanwhile, WPP tumbled another 3% despite announcing plans to resume its dividend after beating dire second-quarter earnings expectations.
U.S.
Stocks rose on Friday to wrap up another strong week on a high note as the Dow Industrial erased its losses of 2020. The 30-stock Dow closed 161 points higher, or 0.6%, at 28,653.87. The S&P 500 gained 0.7% to close at a record high of 3,508.01. The Nasdaq Composite advanced 0.6% to end the day at 11,695.63. After Friday’s close, the Dow was up 0.4% for 2020. “The industrials are the last of the major broad indexes to” erase their 2020 losses, said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “To some extent, this is psychologically positive for the market.” He noted, though, it was “almost inevitable” that the Dow would return to positive territory. “The Nasdaq has been positive for a long time and the S&P 500 is now up more than 8% for the year.” Walmart and Coca-Cola led the way for the Dow, rising 2.7% and 3.3%, respectively. Tech and energy were the best-performing sectors in the S&P 500, gaining 1.1% and 1.9%, respectively. Wall Street was coming off a mixed performance after the Federal Reserve on Thursday unveiled a major policy shift, allowing inflation and employment to run higher to continue to support the economy. The move indicates that interest rates are likely to stay near zero for a long period of time. The central bank previously hiked rates preemptively to head off higher levels of inflation. On the data front, U.S. consumer spending rose 1.9% in July, topping a Reuters forecast of a 1.5% gain, Personal income was also stronger than expected, rising 0.4% while economists had forecast a drop of 0.2%.
ASIA
Asian stocks are mixed to higher, with shares in Japan outperforming, bolstered by Berkshire Hathaway Inc.’s purchase of stakes in five major trading companies, one of billionaire Warren Buffett’s biggest investments in the nation. Hong Kong and China rose, but South Korea fell. The Nikkei is up 1.1%, the Hang Seng gaining 0.39% (Tencent +0.28%) and the Shanghai 0.48% higher. In OZ the ASX 200 was down 0.22%, with the metals & mining index weighing, down 0.17%. A gauge of China’s services industry was at the strongest level since early 2018 in August. Government-led investment has boosted demand and some reopening of overseas economies aided the export sector. Meanwhile, tensions between the U.S. and China continue to simmer. In another development, ByteDance Ltd. will be required to seek Chinese government approval to sell the U.S. operations of its short-video TikTok app under new restrictions Beijing imposed on the export of artificial intelligence technologies.
COMMODITIES
Oil traded above $43 a barrel in New York with focus returning to the fragile demand recovery after the hurricane threat eased. Attention shifted once again to the outbreak and the struggles by many major economies to contain the virus, with
India recording its biggest daily spike in cases and New York State reporting a surge in infections. Meanwhile, U.S. Gulf Coast refineries started the recovery process after Hurricane Laura passed, with facilities in southeast Texas avoided the worst of the storm.
Gold climbed for a second day trading at $1,968 a pound as investors continued to weigh the latest shift in the Federal Reserve’s approach to setting U.S. monetary policy ahead of speeches this week from some officials. Platinum & Palladium as well as Silver are all trading higher.