Stock Markets Advance, Futures Climb, Tech Rebound

05/11/2020 The JSE closed firmer in the green 0.88% to 53,656.21 as the U.S Presidential election ballot counting continues, the race to the White House remains tight, and volatility could continue for days as markets awaits the outcome in crucial swing-states. The blue-chip Top40 index saw Wednesday’s session out 0.92% stronger, with Prosus NV advancing 4.55% at the close as the stock hit a 52-week high. Capitec firmed up 2.88% at the end of trading, the bank announced on Tuesday a partnership with mortgage financier SA Home Loans to enter the home loan market. The rand trading 15.9100 to the dollar this morning, victory for Joe Biden would bolster risk appetite and emerging-market assets, a contested result or a win for Donald Trump could boost the dollar as a haven.

Gains across Asian markets were broad based and Hong Kong outperformed. U.S. equity futures advanced into positive territory and Nasdaq contracts extended Wednesday’s surge. Joe Biden won Michigan and Wisconsin, putting him on the brink of taking the White House. President Trump’s team opened legal fights to stop vote counting in at least two states.

NEWS:
• (OMU SJ): Old Mutual Sees Too Much Bad News Priced Into South African Stocks
• Ex-South African Airways Chairwoman Dudu Myeni Stonewalls Judicial Probe
• Red Falcon, Missiles Prioritized for South Africa Defense Needs
EQUITY PREVIEW:
• (MRP SJ): Mr Price Sees 1H Basic EPS Dropping 33% to 38%
• (SNH GR): Steinhoff Fails to Get All of the Support Needed for Settlement
• (DCP SJ): DIS-CHEM 1H ADJ EPS 0.36 RAND VS. 0.31 RAND Y/Y, SCRAPS 1H DIVIDEND TO PRESERVE CASH
ECONOMIC DATA:
• 1pm: Sept. Electricity Production YoY, prior -2.4%
• 1pm: Sept. Electricity Consumption YoY, prior -0.4%
GOVERNMENT:
• 10am: Inquiry into state corruption continues hearings in Johannesburg, with focus on South African Airways
• 10am: Announcement on outcomes of most recent cabinet meeting
• 11am: Minerals Council and chrome producers briefing on government plans for export tax
• 2pm: Lawmakers debate bailouts of state-owned companies
CORPORATE EVENTS:
• Annual general meetings: (AVI SJ), (TRU SJ)
• Earnings Calls: (DCP SJ), (SAP SJ)

EU/UK/US
European markets recovered from early morning drop to close higher despite weak industry data across the euro zone suggesting a double dip recession. In Spain services activity, PMI, slipped back to 41.4 from 42.4, while in Italy the picture worsened to 46.7, while France and Germany slipped back to 46.5 and 49.5 respectively. The Stoxx Europe 600 Index advanced 2.1% by the close in London, with the FTSE100 gaining 1.67%, the DAX 1.95% stronger, alongside the CAC-40 advancing 2.44% at the close.

The Dow was 1.34% higher at the end of trading on Wednesday, with the S&P 500 was 2.20% firmer and the Nasdaq skyrocketing 3.85%. U.S. mortgage applications jumped 3.8% in the week ended 30 October, following a 1.7% increase in the previous week. Applications to refinance a home loan surged 6.4%, while homebuyer mortgage applications dropped 1.3%. Stock futures steadied into positive territory as traders await the outcome of the U.S. election with several key states’ results still hanging in balance.
• Dow futures +168 points or 0.61%
• S&P 500 futures +25.5 points or 0.74%
• Nasdaq futures +166.72 points or 1.42%
POLITICS:
• Joe Biden won Wisconsin, according to the Associated Press, offering him a clearer path to defeat President Donald Trump.
• Nancy Pelosi’s prestige and power as House speaker took a hit as Tuesday’s Democratic losses left her heading into what could be her last term in Congress with a diminished majority.

ASIA/COMMODITIES
In Asia on Thursday, the Hang Seng gained 2.7% while the Shanghai Composite modestly 0.77. Tokyo’s Nikkei climbed 1.47, while Australia’s ASX 200 gained 1.1%. Gold was up as it appeared increasingly likely that U.S. presidential candidate Joe Biden would become the next U.S. president. Gold futures were up 0.62% at $1,908.