MPC holds the repo rate at 3.5%, Reserve Bank warns violence wiped out strong recovery

23/07/2021 U.S. equity futures climbed Friday and Asian stocks slipped after earnings optimism helped Wall Street edge toward an all-time high despite mixed economic data. A gauge of the dollar held a recent decline. In Asia, Hong Kong stocks slid as potential penalties for ride-hailing giant Didi Global Inc. sapped sentiment toward Chinese tech firms. Regulators are considering serious, perhaps unprecedented, penalties after Didi’s controversial initial public offering last month. Japan is shut for a holiday.

Global stocks are on course for a modest weekly gain, bolstered by generally robust corporate profits and stimulus support. At the same time, July’s decline in 10-year U.S. Treasury yields may for some signal concern over a possible peak in economic growth, in part as the delta coronavirus strain forces mobility curbs in some countries.

Locally the MPC holds the repo rate at 3.5%, the lowest official rate for about five decades but MPC but warns the violence that disrupted SA’s key supply chains negated a strong economic recovery in the first quarter and prevented an upward revision of full-year growth forecasts. The rand weakened to R 14.75 against the dollar after the MPC announcement , while the JSE closed firmer amid mixed global markets. The All Share closed up 1.27% with MRP up 4.48% helping the Retail Index gain 2.76%, the Indi25 and Resi were up 1.51 and 1.24 percent respectively.
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European stocks closed higher yesterday amid dovish comments from European Central Bank. The pan-European Stoxx 600 closed up 0.6%, with travel and leisure shares jumping 2.6% to lead gains as most sectors and major bourses finished in positive territory. The European Central Bank on Thursday held monetary policy steady, but tweaked guidance to reflect its recently-hiked inflation target. The bank vowed to maintain a “persistently accommodative” stance until its target is met consistently.
On Wall Street, U.S. stocks were mixed as an unexpected jump in jobless claims kept investors on edge about the economy. Jobless claims unexpectedly rose to 419,000 last week, higher than the 350,000 economists polled by Dow Jones estimated and more than the upwardly revised 368,000 from the previous period. The major U.S. indexes closed the regular trading session higher to notch a three-day win streak. The Dow rose 25.35 points, or 0.07%. The S&P 500 climbed 0.2% higher. The tech-heavy Nasdaq Composite led the markets with a 0.36% gain. Futures on the Dow are up 62 ponts,10 points on the S&P and 44 points on the Nasdaq. Major technology companies including Microsoft, Google-parent Alphabet, Apple, Facebook and Amazon are set to report second-quarter earnings next week.
Shares in Asia-Pacific are lower as investors monitored Chinese tech stocks in Hong Kong after regulatory concerns resurfaced. By the afternoon session in Hong Kong, shares of Chinese tech firms listed in the city fell. Kuaishou plunged 9.1% while Tencent slipped 0.92% and Meituan dropped 1.43%. The broader Hang Seng Tech index declined 2.19%. Hong Kong’s Hang Seng index overall fell 0.99%. Bloomberg News reported that Beijing is considering harsh penalties on ride-hailing giant Didi. The penalties being planned range from a fine likely bigger than the record $2.8 billion Alibaba paid earlier this year to even a forced delisting after Didi’s IPO last month.
Gold prices steadied on Friday after hitting a more than one-week low in the previous session, as a retreat in U.S. bond yields and weak economic data countered a stronger dollar. Gold Spot is just 0.15% lower at $ 1804, Platinum – 0.24% at $ 1093 and Palladium up 0.06% at $ 2725.
Oil prices trimmed overnight gains on Friday but were poised to end the week largely steady after rebounding from a sharp drop, underpinned by expectations supply will remain tight as demand recovers. Demand growth is expected to outpace new supply, following the agreement by OPEC+, to add back 400,000 barrels per day each month from August through December. Brent is trading down 0.47% at $ 73.44 and WTI down 0.46% at $ 71.59.