Japan shares bounce back as upbeat earnings offset virus worries

02/08/2021 Asia-pacific stock markets rose on Monday as some of the concerns over China’s regulatory crackdown eased, upbeat earnings from Japan countered concerns about the fast-spreading Delta coronavirus variant , and progress on a U.S. infrastructure spending plan aided sentiment. Auto-part maker Denso jumped 5.1%, extending its gains to a second session after reporting strong earnings. Misumi Group gained 8.4% to hit a record high, after the trading firm specialised in factory automation and machine parts reported brisk earnings. Equities jumped in Japan and Australia. Hong Kong and China stocks advanced following last week’s steep selloff, and rally in Chinese government bonds quickened. Tencent’s sales slid 8% sequentially as its major games struggled, the stock is trading 2.30% below the watermark in Hong Kong. U.S futures climbed. Ten-year U.S. Treasury yields and the dollar were steady.
Oil prices retreated on Monday on worries over China’s economy after a survey showed factory activity growing at its slowest pace in 17 months, further concerns compounded by a rise in oil output from OPEC producers.
Brent crude oil futures skidded 1.06%, to $74.61 a barrel, while U.S. WTI crude futures dropped 0.95% to $73.28 a barrel.

Gold held a decline as investors waited for a U.S. jobs report this week for clues on when the Federal Reserve will start reducing stimulus. The yellow metal is on the backfoot 0.20% to $1810.28

Here are some key events to watch this week:
• Earnings are due this week from Alibaba, BP, Toyota, Uber, Roku, Moderna, KKR
• Reserve Bank of Australia policy decision Tuesday
• Bank of England is expected to keep its benchmark interest rate and its bond-buying target unchanged Thursday
• The U.S. jobs report is expected to show another robust month of hiring Friday

The JSE closed weaker on Friday, lost 0.85% to 68,970 points and the Top-40 gave up 0.86% amid mixed global markets as concern over China’s tech crackdown and rising Covid-19 infections weighed on sentiment at the end of the week.
The All-share was pulled lower by miners after closing at a record high on Thursday as markets cheered the US Federal Reserve’s dovish stance. Anglo American led losses among the larger diversified miners, down 2.72% to R653.59. BHP lost 2.18% to R473.67 and Glencore 2% to R66. Rand down 0.11% to R14.61/$, Yield on 10-year govt rand bonds fell 5.40 bps to 9.20%. We looking forward to a positive start as futures indicate, on IG markets, a gain of 227 points or 0.35% gain.

Transnet will on Monday end the force majeure that was declared by the Port Terminals operating division at the container terminals in the ports of Cape Town, Durban, Ngqura and Port Elizabeth, the state-owned company said in a media statement.

NEWS:
• South African Fuel Prices to Rise From Aug. 4, Government Says
• Top Security Lawmaker Urges Overhaul of South African Crime Unit
• Eskom CEO Lays Out Funding Plan to Transition Away From Coal
• South Africa Posts Smallest First-Quarter Budget Gap in 6 Years
• Naspers Investors Should ‘Hold Fast’ Amid China Turmoil: Anchor
• MTN Nigeria to Limit Dollar Spending to Cut Currency Risk
• South African Stocks Fall From Record as Anglo, BHP Lead Retreat
• Glencore Boosts Outlook for Another Bumper Trading Year
• S. Africa Probe Alleges Wrongdoing by Health Minister, BD Says
• Ex-Deloitte Partner Found Guilty in Steinhoff Audit, News24 Says
• S. Africa’s Suspended Health Minister Mkhize Owes 4m Rand: BD
MEDIA SUMMARIES:
• TRANSLATION: Valor: Anglo reports record gain in Brazil with high prices
• Daily Maverick: ANC members lodged ‘boast posts’ on WhatsApp groups after looting and truck hijackings
• Business Day.za: Workplace sites given permission to offer vaccines to employees of all ages
• Business Day.za: Woolworths sets new sustainability goals with an eye on prices
• Moneyweb: Sygnia, Wierzycka and several ‘small related party transactions’
• Fin24: Banks will cough up nearly R400k for each ATM destroyed during unrest
• Fin24: Freeze new coal plants, or SA’s economy will bear the cost – report
ECONOMIC DATA:
• 11am: July Absa Manufacturing PMI, est. 54.0, prior 57.4
• July Naamsa Vehicle Sales YoY, est. 10.5%, prior 20.2%
CORPORATE EVENTS:
• Annual General Meetings: IPF SJ

EU/UK/US
European stock markets slipped on Friday as continuing worries over China’s regulatory crackdown on tech stocks overshadowed upbeat earnings reports. The pan-European Euro Stoxx 600 index dipped 0.45%, alongside a 0.61% drop for the German Dax to 15,544.39, while London’s FTSE100 dipped 0.65% at the close. French carmaker Renault jumped 3.3% after it forecast a full-year 2021 profit even as a global shortage in chips and rising raw material costs crimped car production. British Airways-owner IAG fell 3.4% after it said summer capacity would rise to 45% of pre-pandemic levels but warned that significant uncertainty remained. European futures upbeat this morning, with FTSE100 up 33points, or 0.47%.

Wall Street closed in the red on Friday. Amazon. Inc slumped after reporting slowing growth in its e-commerce business. Other e-commerce companies such as Etsy Inc., Wayfair Inc., Chewy Inc. and Shopify Inc. fell in sympathy. The Dow slipped 0.42%, the S&P gave up 0.54%, while the Nasdaq retreated 0.71%. The July jobs report and another packed schedule of second-quarter corporate earnings results await investors this week. All three main benchmark U.S futures are firmly in the green this morning: Dow + 0.44%, S&P500 + 0.52%, Nasdaq + 0.52%.

ASIA
Asian markets gain even as China’s manufacturing slows – tech companies mixed in Hong Kong. Australian shares touched a record high on Monday as Afterpay Ltd. jumped after U.S. based Square Inc. agreed to buy the buy now, pay later firm for $29 billion, with the tech index being on track for its best day in nearly a decade. The S&P/ASX 200 index rose 1.23%. Japan’s Nikkei rallying 1.90% on companies upbeat earnings, Hang Seng firm 0.92% as China’s crackdown on techies slows down, and Shanghai Composite 1.70% in the green.