Stocks, Futures Weather Concern About Delta Strain

30/06/2021 Most Asian stocks rose Wednesday after U.S. shares closed at a record on economic optimism and signs that vaccines can counter a highly infectious coronavirus strain. The dollar held an advance. Australian equities outperformed, shrugging off lockdowns imposed to fight the delta variant of the virus, while Japan and Hong Kong fluctuated. U.S. contracts were higher after the S&P 500 eked out a gain, remaining on track for a fifth monthly advance — the longest run since August. Moderna Inc. reached an all-time peak after saying its vaccine produced protective antibodies against the delta strain, which has spread around the world since emerging in India. The dollar has firmed on haven demand due to Covid-19 flareups, a climb that has hurt gold, which is set for the biggest monthly drop in over four years. Treasury yields were steady as traders digested the latest Fed comments. Oil climbed back above $73 a barrel. OPEC+ ministers are divided ahead of a key meeting later this week on production policy. Tencent trades 0.85% lower in HK. The JSE Top 40 futures has opened slightly higher, up 130 points or 0.2%, with the Rand strengthening slightly, last at 14.29 vs the USD.
Here are key events

  • OECD meets in Paris to finalize a proposal to overhaul global minimum corporate taxation Wednesday
  • China’s President Xi Jinping will deliver a speech as the nation marks the 100th anniversary of the founding of the Chinese Communist Party Thursday
  • OPEC+ ministerial meeting Thursday
  • ECB President Christine Lagarde speaks Friday
  • The U.S. jobs report is forecast to show an acceleration in payrolls growth in June Friday
    The FTSE/JSE Africa All-Share Index closed up 1.1% to 66,548, with SA Inc names contributing the most. Retailers were up 3.9%, led by a gain of 5.1% in Mr Price, with the banking sector up a healthy 2.4%. Heavyweights Naspers and Prosus were also among the gainers ending the session up 2.3% and 2.06% respectively. The Precious Metals & Mining Index closed negative, down 0.74%. The Rand weakened 0.7% to 14.35 per US$ as of 7:10 p.m. Johannesburg, with the Yield on 10-year govt rand bonds that fell 0.10 bps to 9.32 %.
    Jacob Zuma, who’s been repeatedly implicated in aiding and abetting the plunder of state funds during the near decade he led South Africa, was sentenced to 15 months in jail for defying a court order to testify at a graft inquiry.

NEWS:

  • Delta Variant Now Dominant in South Africa’s Commercial Hub
  • South Africa Medical Association Slams State’s Slow Virus Response
    EQUITY PREVIEW:
  • South African Stocks Surge as Zuma’s Jailing Boosts Sentiment
  • Citi Sees South African Banks Well Provisioned, Absa Best-Placed
  • Exxaro 1H Coal Production Drops, Cites Poor Transnet Performance
    MEDIA SUMMARIES:
  • Business Day.za: Ramaphosa poised to dismiss Zweli Mkhize over multimillion-rand tenders scandal

ECONOMIC DATA:

  • 8am: May Money Supply M3 YoY, prior 2.02%
  • 8am: May Private Sector Credit YoY, est. -0.95%, prior -1.76%
  • 2pm: May Trade Balance Rand, est. 49.6b, prior 51.2b
  • 2pm: May Monthly Budget Balance, est. -6.1b, prior -80.4b

GOVERNMENT:

  • South African government holds briefing on new lockdown restrictions for education sector
    EU/UK
    European stocks rose on Tuesday as global investors monitored the spread of the delta Covid-19 variant and awaited key economic data out of the U.S. The pan European Stoxx 600 closed higher by 0.4%, with chemicals shares climbing 0.9% to lead the gains. European Central Bank policymakers on Monday began a public discussion about when and how to wind down the massive emergency bond purchase program launched last year to support the euro zone economy through the pandemic. Euro zone economic sentiment rallied to a 21-year high in June as further reopening boosted optimism, according to the European Commission’s monthly sentiment survey. Economic sentiment rose to 117.9 points from 114.5 in May, ahead of a consensus estimate of 116.5 from economists in a Reuters poll. Meanwhile euro zone consumer inflation expectations came in at 27.1 in June, up from 22.2 in May, and producer price expectations rose from 29.9 in May to 36.0 in June. German annual consumer price inflation rose by 2.1% in June, slightly down from a 2.4% increase in May. That was still above the ECB’s target of close to but below 2%, however. In terms of individual share price movement, French electrical equipment company Rexel climbed 4.6% after raising its 2021 profit guidance. At the bottom of the Stoxx 600, shares of German brakes maker Knorr Bremse plunged 12% after it said it was interested in buying a 60% stake in automotive lighting firm Hella. Elsewhere, Anglo-German travel operator Tui fell 5% after a convertible bond announcement.
    US
    Stocks close little changed despite strong readings for home prices and consumer confidence. The S&P 500 notched another record high on Tuesday amid bullish economic data but retreated toward the flat line later in the session as Wall Street continued its recent period of low volatility. The broad market index ticked up less than 0.1% to 4,291, good enough for its fourth-straight record close. The Dow Jones Industrial Average finished with a gain of about 9 points after being up more than 100 points earlier in the session, closing at 34,292. The tech-heavy Nasdaq Composite added about 0.2% for its own record of 14,528. Homebuilder stocks moved higher after S&P Case-Shiller said home prices rose more than 14% in April compared to the prior year. Five U.S. cities, including Seattle, saw their largest annual increase on record. Shares of PulteGroup rose 2%. Semiconductor stocks gained strength later in the session, with Skyworks and Advanced Micro Devices climbing 4.5% and 2.8%, respectively. General Electric boosted the industrials sector, rising over 1% after Goldman Sachs named the stock a top idea. Shares of Morgan Stanley jumped more than 3% after the bank said it will double its quarterly dividend. The bank also announced a $12 billion stock buyback program. The announcement follows last week’s stress tests by the Federal Reserve, which all 23 major banks passed. However, some other bank stocks gave up early gains and weighed on the broader indexes despite increasing their own payout plans.
    ASIA
    Asian markets were mixed on Wednesday, with oil prices continuing to rise. Meanwhile, China released its data on manufacturing activity in the morning. Mainland Chinese stocks rose by the afternoon. The Shanghai composite was up 0.24%, while the Shenzhen component jumped 0.82%. Hong Kong’s Hang Seng index was subdued, edging down 0.16%. China-based drugmaker Hutchmed made its debut in Hong Kong, trading as high as 59.80 Hong Kong dollars ($7.70) — up 49.1% from its offer price. In a Hong Kong exchange filing, China’s biggest bad-debt manager Huarong Asset Management said it cannot estimate when it will publish its 2020 financial results. The firm said “auditors will need more information and time to complete” the audit procedures. It said, however, that failure to provide the results does not constitute a default. There have been concerns over the creditworthiness of the state-owned firm, which saw its dollar bonds plunge earlier this year. Trading of its shares has been suspended since April 1. Meanwhile, China’s official manufacturing Purchasing Manager’s Index (PMI) grew at a slower clip in June — hit by a resurgence of Covid-19 cases in the major export province of Guangdong that led to port disruptions. The reading eased to 50.9 in June from 51 in May, according to Reuters. The 50-point mark separates growth from contraction. Japan’s Nikkei 225 was just below the flatline, and the Topix edged down 0.15%. South Korea’s Kospi was up 0.51%. Tech stocks jumped, with SK Hynix up 2.8% and LG Electronics rising 1.24%. Over in Australia, the S&P/ASX 200 jumped 0.53%. Major mining names were in positive territory, with Rio Tinto and Fortescue Metals jumping around 2%.
    COMMODITIES
    Gold headed for the biggest monthly drop in more than four years as the dollar strengthened, with investors weighing the outlook for monetary policy after the Federal Reserve’s hawkish shift. Spot gold rose 0.2% to $1,763.82 an ounce at 10:18 a.m. in Singapore, after dropping to $1,750.75 on Tuesday, the lowest intraday level since April 15. Prices are down 7.5% this month, the most since November 2016. Silver, platinum and palladium all advanced.
    Oil prices extended the previous day’s small gains after an industry report showed U.S. crude stockpiles fell last week, overriding trader and investor concerns about transportation curbs in some countries as COVID-19 cases surge. Brent crude was up 31 cents, or 0.4% at $75.07 a barrel, after edging higher on Tuesday. U.S. crude was up 46 cents, or 0.6% at $73.44 a barrel, having risen 0.1% in the previous session.
    Copper gained after the demand outlook for commodities was bolstered by new manufacturing data from China and gains in global equity markets. China’s official manufacturing purchasing managers’ index was little changed at 50.9 in June, suggesting its economic recovery was stabilizing at a solid pace. Copper rose 0.3% to $9,374 on the London Metal Exchange as of 12:01 p.m. in Shanghai, heading for a 20% gain in the year to date. The best performer is tin, also the least-traded, which is set for its biggest annual gain since trading began in 1989 amid a worsening supply squeeze. Nickel is set to gain 10% and aluminum 28%.
    Iron ore investors are girding for mounting demand risks in top steel producer China, after a volatile first half that has lifted prices more than 30% from the start of the year. The latest official data show the steel industry purchasing manager’s index and the output index in June dropped from May. Meanwhile, the nation is entering a seasonal lull in steel consumption, as construction and manufacturing activities slow in summer. Futures in Singapore rose 0.7% to $207.65 a ton by 11:25 a.m. local time, on track for a third consecutive monthly advance. Contracts in Dalian rose 1.7%. Rebar and hot-rolled coil futures jumped in Shanghai.