Asia-Pacific Stock Markets Rise Ahead Of Wall Street Earnings

13/07/2021 Asian shares advanced on Tuesday after Wall Street notched further all-time highs as investors awaited second-quarter earnings season. The S&P 500 and tech-heavy Nasdaq 100 closed at new highs. Both U.S. and European futures fluctuated this morning. Treasury yields were steady. Japan’s Nikkei firmly in the green, and so is Australia, despite recent covid-19 related travel restrictions. Hong Kong outperforming regional peers, Tencent advancing 4.80% (retreated about 2% yesterday).

Oil rose on expectations of further declines in U.S. crude inventories. Brent crude for September climbed 19 cents, or 0.27%, to $75.35 a barrel; while U.S. WTI crude for August was at $74.33 a barrel, up 24 cents, or 0.32%.
Gold was up on Tuesday, while the dollar weakened ahead of U.S. inflation data that could indicate when asset tapering by the U.S. Federal Reserve is likely to begin. Gold futures were up 0.20$ to $1,809.85. The dollar, which usually moves inversely to gold, inched down on Tuesday.

Here are some events to watch this week:
• Bank of America, BlackRock, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley are among firms starting the U.S. earnings season
• A closely-watched inflation metric — the June U.S. consumer price index — will offer insight into the inflationary pressures Tuesday

Locally, the JSE tracked its international counterparts despite the rand sliding 1.27% on the day amid social unrest that engulfed Gauteng and KZN provinces, post the jailing of former President Jacob Zuma. The local bourse gained 1.37% to 67,293 points and the Top-40 1.43%. The travel & leisure index (City Lodge, Sun International and Tsogo Sun’s hotel etc) gained the most since November 2020, up 5.13%. Precious metals rose 2.24%, resources 1.54% and industrial metals 1.19%.
Naspers added 1.63% to R2,779.98 and Prosus rose the most in more than two weeks, up 2.34% to R1,329.50. Rand down 1.27% to R14.40/$, Yield on 10-year govt rand bonds rose 2.30 bps to 9.27%. Top-40 futures up 400+ points on IG, looking forward to a good start at the opening of the local market.

NEWS:
• Ramaphosa Pleads for End to Days of Deadly South African Riots
• Stores Close Across South Africa as Violent Riots Intensify
• Rand Slumps With South African Riots Adding to Covid Woes
• S. Africa Deploys Army to Help Quell Escalating Pro-Zuma Riots
• South Africa Needs Bold Action to Create Jobs, World Bank Says
• World Bank Raises S. Africa 2021 GDP Growth Est. to 4% From 3.5%
EQUITY PREVIEW:
• Mozambique Fines Standard Bank for Forex-Market Manipulation
• South Africa Stocks Erase Drop as Richemont Leads Gainers
• Walmart’s S. African Unit Forced to Close Some Stores Amid Riots
• MTN Downgraded by Morgan Stanley Following Stock Outperformance
• Imperial Logistics Cut to Hold at HSBC; PT 66 rand
MEDIA SUMMARIES:
• Fin24: About 95% of SAA pilots vote in favour of settlement agreement
• Business Day.za: Ramaphosa says ANC will forge ahead with renewal as Zuma protests spread
• Mail & Guardian: South Africans will pay for the costly electricity from DRC’s Inga 3 dam
ECONOMIC DATA:
• 11:30am: May Mining Production MoM, est. 0%, prior 0.3%
• 11:30am: May Mining Production YoY, est. 31.5%, prior 116.5%
• 11:30am: May Platinum Production YoY, prior 276.1%
• 11:30am: May Gold Production YoY, prior 177.9%
LEVEL 4 SNOW WARNINGS FOR SOUTH AFRICA:
• FREEZING TEMPERATURES AND FROST EXPECTED
• A strong cold front will make landfall in the Western and Northern Cape Provinces tomorrow (Monday 12 July 2021).
• It will then pass through the central and eastern half of SA on Tuesday. Very cold temperatures can be expected throughout the week.

EU/UK/US
European stock markets overcame early weakness to finish higher on Monday, but worries about the pace of economic recovery made defensive sectors the best bid while travel stocks slumped with the Delta variant of coronavirus becoming dominant. The pan-European Stoxx 600 index gained 0.69%, alongside a 0.65% advance for the German Dax, while London’s FTSE100 remained flat 0.05%. European stock futures remain pretty flat, with both the Dax and CAC-40 unchanged and the FTSE100 notching up 0.05% – according to IG markets.

The S&P 500 Index closed at another record high, inching up 0.35% at the close to 4384.63 level, as investors looked to a highly anticipated second-quarter earnings season which kicks off Tuesday with results from Goldman Sachs Group Inc., JPMorgan Chase & Co. and PepsiCo Inc. The tech-heavy Nasdaq100 0.21%, while the Dow was up 0.36% at 34,996.18. Second-quarter earnings kick off Tuesday with high expectations for both revenue and profit growth. Investors also had an eye locked on the yield on the benchmark 10-year Treasury note, currently sitting at around 1.36%. U.S stock futures remains, unchanged.

ASIA
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5%, tracking a Wall Street rally overnight. Japanese stocks gained on Tuesday, after markets recovered from last week’s sell-off awaiting a slew of corporate earnings for a fresh readout on the country’s economic health. Japan’s Nikkei225 rose 0.47%, with Hong Kong 1.60% stronger in the region, while Australia’s ASX 200 gains 0.15% led by materials and communications services sector. Shanghai shares rose on Tuesday, the index 0.25% firmer, as new data showed China’s exports grew at a much faster-than-expected pace in June on recovering global demand.