Asian Stocks Rise After U.S. Record High; Bonds Steady

05/02/2021 Asian stocks pushed higher this morning after their U.S. peers climbed to a record on signs of a healing labour market and improving coronavirus trends. Treasuries were steady after a widely watched segment of the yield curve steepened to levels last seen in 2015. Japan and Hong Kong were among markets leading the gains. S&P 500 futures are ticking higher after the benchmark closed up more than 1%, led by banks and tech shares, while the Russell 2000 Index of smaller companies climbed 2%. Earnings remained in focus with EBay Inc. and PayPal Holdings Inc. surging on upbeat forecasts. The dollar held an overnight gain. Crude oil advanced and gold steadied after Thursday’s decline. Tencent trades slightly higher in HK, up 0.82%. The JSE Top 40 futures are indicating a better start, up 230 points or 0.41%, with the Rand stronger at 14.98 vs the USD.

Locally the FTSE/JSE Africa All-Share Index closed the session up 1.2% to 63,786, with all sectors except gold closing in the black. It was a day dominated by SA Inc counters, with banks that rallied 2.6% and retailers that surged 3.8%. The Platinum sector also added a healthy 2.2%, with Gold the only sector closing in the red, down 3.2% as the safe haven was out of favor on a risk on day. The Rand was down 0.7% to 15.05 per US$, with the Yield on 10-year govt rand bonds that fell 0.30 bps to 8.45 bps.
The South African Reserve Bank will publish data on its purchases of government bonds in January, along with figures on foreign-exchange and gold reserves. Holdings of government securities rose to 41.8 billion rand in December, from 41.1 billion rand the previous month.

  • Gold Tumbles to Two-Month Low With Dollar, Yields Climbing
  • S.Africa Treasury Likely To Maintain 2020-21 Bond-Sale Level
  • South Africa’s Western Cape Mulls First Provincial Bond Sale
  • Johannesburg’s First Gas-Fired Power Plants Planned by Harith
  • South African Stocks Resist Global Slump as Sasol Extends Rally
  • Amplats Calls Priciest Precious Metal’s Rally Unsustainable
  • MTN Soars as Tower-Sale Plan, Rising Oil Prices Boost Sentiment
  • Harmony Reports Fatality After Fall of Ground at Target Mine
  • TFG Raised to Buy at SBG Securities; PT 126 rand
  • Truworths Cut to Hold at SBG Securities; PT 49 rand
  • TFG Raised to Overweight at Nedbank CIB; PT 128 rand
  • Amplats Cut to Hold at HSBC; PT 1,598 rand

ECONOMIC DATA:
Gross Reserves fall to $54.8b, est. $54.8b, prior $55b
Net Reserves fall to $51.99, est. $51.9b, prior $52.1b

EU/UK
The pan-European Stoxx 600 finished up 0.5% but with different indexes pointing in different directions. Banks added 2.7% following the Bank of England’s comments on negative interest rates, while utilities fell 0.5%. Reporting before the opening bell, Deutsche Bank beat earnings expectations for 2020 as it emerges from the coronavirus crisis, led by a strong performance in its investment banking division. Shares of Germany’s largest lender closed 0.1% lower. Oil giant Royal Dutch Shell reported a sharp drop in full-year profit with the pandemic hitting demand, and taking a heavy toll on the global oil and gas industry. The company’s stock slipped 1.5%. The Bank of England on Thursday left monetary policy unchanged following its first meeting of 2021, with its main lending rate held at 0.1% and target stock of asset purchases kept at £895 billion ($1.2 trillion). In terms of individual share price movement, Spanish bank BBVA climbed 7.7%, after agreeing to sell banking service Holvi. French software firm Dassault Systemes climbed more than 6% after forecasting a rise in 2021 revenues on the back of a strong performance for its clinical trials business. Bayer shares climbed 5% after the German pharmaceutical giant reached a $2 billion deal to settle future compensation claims in the U.S. over cancers linked to its Roundup weedkiller. At the bottom of the European blue chip index, consumer goods group Unilever fell 6% after full-year results.
US
U.S. stocks jumped on Thursday, extending the rally into a fourth straight day as investors assessed a new batch of corporate earnings and solid economic data. The Dow Jones Industrial Average popped 332 points, or 1.1%, to 31,055, closing near its session high. The S&P 500 climbed 1.1% to a record closing high of 3,871, supported by communication services and financials. The Nasdaq Composite jumped 1.2% to 13,777, also reaching a new high. A better-than-expected jobless claims report helped boost sentiment. First-time claims for unemployment insurance totaled 779,000 for the week ended Jan. 30, below the 830,000 estimate from economists surveyed by Dow Jones. EBay jumped more than 5% after beating on both the top and bottom lines and issuing a rosier-than-expected forecast for the first quarter. PayPal gained more than 7% after strong quarterly results, while Qualcomm slipped over 8% after reporting revenues below consensus estimates for its fiscal first quarter. Apple rose 2.6% after CNBC reported that it is close to finalizing a deal with Hyundai-Kia to produce driverless cars.
ASIA
Shares in Asia-Pacific rose in morning trade following overnight gains that saw the S&P 500 hitting a record closing high. Shares of China’s Kuaishou Technology soared in their Hong Kong debut, rocketing nearly 200% from their issue price of 115 Hong Kong dollars (about $14.83) per share. The stock later pared those initial gains, but was still up more than 150% by the afternoon. Meanwhile, the benchmark Hang Seng index in Hong Kong gained 0.52%. Mainland Chinese stocks also advanced: The Shanghai composite was up 0.46% while the Shenzhen component rose 0.38%. In Japan, the Nikkei 225 gained 1.4% while the Topix index rose 1.3%. South Korea’s Kospi advanced 0.43%. Shares in Australia rose as the S&P/ASX 200 gained 1.1%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.44%.
COMMODITIES
Gold held near a nine-week low as a strengthening dollar, rising Treasury yields, and record U.S. stocks weighed on the appeal of the haven asset ahead of a key jobs report. Spot gold was 0.1% higher at $1,795.61 an ounce, after dropping as much as 2.7% to $1,785 on Thursday, the lowest intraday level since Dec. 1. This week, it’s down 2.8%.
Silver futures rose 0.4%, steadying after recent market turmoil, while spot palladium added 0.3% and platinum was little changed.
Oil headed for its biggest weekly gain since October on confidence that OPEC+ producers are committed to restraining global supplies. Futures in New York rose for a fifth day toward $57 a barrel. OPEC+ has pledged to keep draining a virus-driven surplus as inventories from China to the U.S. shrink.
Iron ore futures headed for a third weekly drop, the worst losing run in 10 months, after a volatile ride as investors grappled with prospects for higher supply, rising stockpiles and escalating demand concerns. Futures traded 0.3% higher at $153.10 a ton, that’s 1.7% lower over the week.