Asia Stocks, U.S. Futures Steady on Growth Outlook / US Stocks snap 3-day losing streak / Jobless claims at pandemic low

21/05/2021 Asian stocks are steady this morning after a Wall Street rebound as traders weighed the economic recovery from the pandemic as well as the possibility of reduced U.S. stimulus. The dollar held a decline. Shares rose in Japan but slipped in China and Hong Kong, where Tencent Holdings Ltd. slid after pledging a sharp boost in investment. European and U.S. equity contracts were modestly in the green after the S&P 500 pushed higher and the Nasdaq 100 rallied past its 50 day moving average. A drop in U.S. initial jobless claims put the focus back on the economic recovery, but there are lingering fears price pressures imperil loose financial conditions. A pause in this year’s commodity boom continued. Gold is around the highest level in more than four months. Its claimed virtual rival, Bitcoin, steadied after a volatile cryptocurrency slump this week. Brent oil was heading for the biggest weekly decline since March, with the market bracing for the prospect of more Iranian crude flows. Tencent is trading down 3.7% in HK despite posting a 65% surge in its quarterly profit on Thursday and could weigh on Naspers and Prosus this morning. The JSE Top 40 futures are indicating a flat start with the Rand steady around the 13.98 level vs the USD.
Here are some key events still this week:

  • Data on existing U.S. home sales for April are due on May 21
  • Euro-area finance ministers and central bank chiefs hold an informal meeting. A larger group of EU finance ministers and central bank chiefs will meet May 22
    The FTSE/JSE Africa All-Share Index closed up 0.4% to 66,124, mostly supported by financials with banks that closed the session out 1.1% in the green on the back of a stronger rand after decision to leave rates unchanged. Naspers and Prosus also posted gains of nearly 2% after Tencent Beats 1Q Estimates. Retailers took a 2% slump after rallies the previous two sessions, with resources also taking a breather. The Rand was up 0.8% to 13.99 per US$, with the Yield on 10-year govt rand bonds that fell 7.50 bps to 9.44 %.
    South Africa’s central bank stuck to the message that its next interest-rate move will be up, as it looked beyond a temporary pickup in inflation to keep the benchmark at 3.5% for a fifth straight meeting.
  • NEWS:
  • South African Central Bank Maintains That Next Rates Move Is Up
  • S. African Stocks Rise as Rand Buoys Banks After Rates Decision
  • South African Electoral Body Weighs Municipal Vote Delay
  • Gold Near Four-Month High as Fed Signals Taper Talk Is Coming
  • Some Vaccines Help Nations Exit The Pandemic Faster Than Others
  • Judge to Rule as S. Africa Sued Over Sasol, Eskom Pollution
  • Africa’s Financial Capital Sets 35% Renewable Energy Target
  • Netcare First-Half Earnings Declined on Covid-19 Second Wave
  • Richemont to Report Results; Shares Up 17.2% YTD
  • Naspers, Prosus Gain After Tencent Beats 1Q Estimates
  • Investec Sees Full-Year Adjusted EPS Dropping to 28.9 Pence
  • Iron Ore Miners to Ship 5.4% More in 2Q Than Prior Q: Bernstein
  • Tiger Brands 1H Net Income 1.39B Rand Vs. 347.4M Rand Y/y
  • Massmarts 19-Week Total Sales Rose 8% y/y to 30.5 Billion Rand
  • Woolworths Sees FY EPS & HEPS More Than 20% Higher y/y

EARNINGS:

  • Cie Financiere Richemont SA (CFR SW)
  • Dis-Chem Pharmacies Ltd. (DCP SJ)
  • Investec Ltd. (INL SJ)
  • Investec Plc (INVP LN)

BOND SALES/PURCHASES:

  • 9am: South Africa to Sell 2.7 Billion Rand of 182-day Bills
  • 9am: South Africa to Sell 1 Billion Rand of 91-day Bills
  • 9am: South Africa to Sell 4.2 Billion Rand of 364-day Bills
  • 9am: South Africa to Sell 3.8 Billion Rand of 273-day Bills
  • 11am: South Africa to Sell 1.875% 2029 Linkers
  • 11am: South Africa to Sell 2.5% 2050 Linkers
  • 11am: South Africa to Sell 2.25% 2038 Linkers

CORPORATE EVENTS:

  • Annual General Meetings: OMU SJ
  • Earnings Calls: CFR SW, DCP SJ, INL SJ, INVP LN

EU/UK
European stocks closed higher Thursday, as investor appetite for riskier assets returned after a wave of selling in the previous session. The pan-European Stoxx 600 ended Thursday’s session up by about 1.2% provisionally, with autos jumping 1.8% to lead gains as almost all sectors and major bourses ended in positive territory. Earnings came from EasyJet, Kingfisher, National Grid, Royal Mail, Manchester United and QinetiQ. EasyJet posted a fiscal first-half loss of £701 million ($990 million) and vowed to fly 15% of its pre-pandemic schedule in the third quarter as travel restrictions ease between the U.K. and Europe. Shares were down 2%. Royal Mail full-year adjusted operating profit of £702 million, a 116% surge from the previous year. However, it refrained from providing a forecast for the current fiscal year, citing uncertainties. The company’s stock price climbed 2.8%. Meanwhile Deutsche Telekom raised its medium-term profit outlook to 3%-5% growth per annum until 2024. The stock was up 2.3%. In terms of individual share price movement, British travel booking site Trainline plunged 23% to the bottom of the Stoxx 600 as the British government prepares to announce a long-awaited overhaul of the rail system on Thursday. At the top of the European blue chip index, Swedish investment firm Kinnevik climbed 8.4%.
US
U.S. stocks rose on Thursday, rebounding from three straight days of losses as technology shares staged a comeback, while the latest jobless claims totaling a fresh pandemic-era low also boosted sentiment. The S&P 500 gained nearly 1.1% to 4,159.12 with tech being the biggest gainer among 11 sectors. The Nasdaq Composite climbed 1.8% to 13,535.74 as Microsoft, Facebook and Alphabet all gained more than 1%. Netflix and Apple rallied more than 2% each. The Dow Jones Industrial Average rose 188.11 points, or 0.6%, to 34,084.15. The number of first-time claims for unemployment benefits for the week ended May 15 came in at 444,000, the lowest since March 14, 2020, the Labor Department reported Thursday. Economists surveyed by Dow Jones had been expecting 452,000 new claims. Tesla, chip stocks and other speculative parts of the market, which took a big hit in the previous session, bounced back on Thursday amid a recovery in bitcoin prices. The world’s largest cryptocurrency jumped as high as 9% to above $42,000, a rebound from when it had dropped as low as nearly $30,000 Wednesday, according to Coin Metrics. Coinbase shares popped 3.8% after Wedbush said to buy the crypto-exchange despite the volatility. Tesla rose 4.1%, while MicroStrategy climbed nearly 4%.
ASIA
Shares in Asia-Pacific traded mixed on Friday following an overnight bounce on Wall Street. The Taiex in Taiwan led gains among the region’s major markets, jumping 1.15% in afternoon trade. India’s Nifty 50 also saw robust gains, rising 1.04%. Mainland Chinese markets were also higher, with the Shanghai composite down 0.45% while the Shenzhen component slipped 0.51%. In Hong Kong, the Hang Seng index edged 0.21% lower. Shares of Tencent in Hong Kong dropped 3.86% by Friday afternoon, despite the Chinese tech behemoth posting a 65% surge in its quarterly profit on Thursday. Japan’s Nikkei 225 rose 0.81% in afternoon trade while the Topix index gained 0.42%. South Korea’s Kospi shed 0.28%. Meanwhile in Australia, the S&P/ASX 200 was largely flat. MSCI’s broadest index of Asia-Pacific shares outside Japan were little changed.
COMMODITIES
Gold headed for a third straight weekly gain as the dollar retreated and Treasury yields wavered, with investors weighing signs of inflation and economic recovery. Spot gold slipped 0.2% to $1,872.69 an ounce. Prices climbed to $1,890.13 on Wednesday, the highest since Jan. 8, and are up 1.6% this week. Silver and palladium fell, while platinum rose.
Brent oil was heading for the biggest weekly decline since March, with the market bracing for the prospect of more Iranian crude flows as the nation inches closer to a revived nuclear deal. Futures in London traded near $65 a barrel after sliding more than 6% over the past three sessions. Iran’s President Hassan Rouhani said world powers have accepted that major sanctions on his country will be lifted, though details and finer points still need to be ironed out.
Iron ore and copper extended a retreat from record highs, with prices poised for steep weekly losses as global inflation concerns mounted. The blistering rally in industrial metals has stalled since last week amid signs the U.S. may ease stimulus and China’s repeated warnings on rising prices.
Iron ore in Singapore fell as much as 3.8% to $193.25 a ton before trading at $194.60. Prices have fallen 3.5% this week, heading for the steepest decline in two months, after hitting an all-time high of $233.75 a ton earlier this month.
Copper fell 0.9% to $9,960 a ton and was down 2.7% this week, extending its retreat from an all-time high of $10,747.50 last week. Other metals were also lower, with aluminum down 0.9% to $2,347.50.