Asia Stock Markets Rebound Led Largely By U.S. Earnings

04/08/2021 Equities markets in Asia-pacific bounced despite wariness in Chinese tech stocks. Investors remained cautious as the rapidly spreading Delta variant of the coronavirus clouds the global economic outlook. MSCI’s broadest index of Asia-Pacific ex. Japan climbed 0.1% to the highest since July 26. Hong Kong stocks staged a comeback, bolstering Tencent Holdings Ltd – up 4.6%. Shares slipped in Japan, where SoftBank Group Corp. retreated on a potential block of its $40 billion sale of Arm Ltd. to chip company Nvidia Corp. U.S. The 10-year U.S. Treasury yield held its retreat, while Japan’s 10-year yield fell to zero for the first time since December. U.S. futures remained flat.

Oil prices fell for a third day on mounting concerns that the increasing spread of the delta-strain of the coronavirus will cut fuel demand. Brent crude oil futures slid 0.28%, to $72.20 a barrel, while U.S. WTI crude fell 0.17%, to $70.44 a barrel.

Gold steadied around $1812.70 as investors waited for a key U.S. jobs report this week. Traders will scrutinize the nonfarm payrolls data due Friday for clues on the Federal Reserve’s monetary policy path.

The JSE closed weaker on Tuesday while global markets were mixed as the fast-spreading delta Covid-19 variant and weak US manufacturing growth weighed on sentiment. The local bourse lost 0.38% to 68,705 points and the Top-40 eased 0.26%. Banks gained 2.02%, financials 1.44%, retailers 1.54% and resources 0.96%. Capitec led the gains in its sector, rising the most in four weeks, up 2.83% to R1,679.19. Nedbank added 2.15% to R171.66, Standard Bank 1.93% to R126.24, Absa 1.92% to R138.41 and FirstRand 1.58% to R55.46. The rand took a shine off rand hedges trading stronger below R14.40/$ for most part of the day on Tuesday. The local currency is currently firm 0.20% against the greenback at R14.28/$. Top-40 futures are +575 points up, IG markets, taking cue from Asia.

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EARNINGS:
• 7am: Liberty (LBH SJ), 1H
Ex Div:
• CKS SJ, HDC SJ, PBG SJ, TLM SJ

ECONOMIC DATA:
• 9:15am: July Standard Bank South Africa PMI, est. 49.0, prior 51.0
CORONAVIRUS:
South Africa’s third wave of coronavirus cases has shifted its epicentre from the economic hub of Gauteng to Cape Town and the surrounding Western Cape province, and hospitals are at risk of being overwhelmed.

EU/UK/US
European shares stayed in record territory on Tuesday, boosted by another raft of strong corporate earnings and return of dividend pay-outs from the likes of BP. The UK oil giant closed up 5.64% after it said it expected to buy back about $1bn of shares each quarter and increase its dividend over the next five years as it swung to a second-quarter profit. The benchmark Stoxx 600 was up 0.20%, alongside a 0.09% dip for the German Dax. The FTSE 100 ended the session up 0.34%, France’s Cac-40 on the other hand gained 0.72% to. Societe Generale, the French lender, jumped 6.4% after it lifted its profit forecast for the full year, while UK-listed Standard Chartered gained 1.0% after it reported a higher-than-expected first-half profit. Travel and leisure stocks tumbled 2.6% as the spread of the Delta variant threatened more curbs on movement. The tech sector was also among the biggest drags after German chipmaker Infineon Technologies fell 0.4% on flagging large production outages. European futures are nicely in the green, with FTSE100 up +20 points.

Wall Street opened softly and later to finish the day firmer as earnings offset new fears about China’s clampdown on publicly traded stocks. At the close the Dow advanced 278 points, or 0.80%, the S&P500 gained 0.82%, while the tech laden Nasdaq saw the session out 0.55% stronger. Stock futures traded slightly lower on Wednesday after closing higher during the regular trading day, with investors’ optimism over rebounding corporate earnings helping counterbalance ongoing concerns over the coronavirus. Contracts on the Dow ticked down -24points, or 0.07%, S&P500 futures were 0.08% in the red, while Nasdaq’s remain unchanged.

Here are some key events to watch this week:
• Treasury quarterly refunding announcement is expected Wednesday
• Federal Reserve Vice Chair Richard Clarida due to speakWednesday
• 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

ASIA
Japanese shares dipped on Wednesday as concerns about the rapid spread of the coronavirus variant kept investors on edge, while upbeat earnings boosted Nippon Steel and other cyclical shares. Some of the country’s top companies such as Toyota Motor , Sony, Honda Motor, and a few trading houses are due to report their results later in the day. The Nikkei share average dipped 0.31%. A bounce in tech shares helped to lift China’s main stock indexes higher, a day after concerns over tightening oversight of online games wiped nearly $60 billion off the market capitalisation of Chinese tech giant Tencent. The Shanghai Composite index was up 0.56%, while the Hang Seng Index was up 1.57%, Australia’s ASX200 was 0.34% in the green – with materials and IT sector leading the charge.