21/12/2021 Asian stocks and U.S. equity futures are higher this morning on wagers that vaccines can help tame the omicron virus outbreak and signs that President Joe Biden could yet revive his $2 trillion economic agenda. MSCI Inc.’s Asia-Pacific share gauge snapped a two-session drop, bolstered by a rebound in Japan and a rally in Chinese property developers. S&P 500, Nasdaq 100 and European contracts are all in the green, signaling stabilization after a global equity index dropped the most this month on Monday. Treasury yields and the dollar are little changed, while commodity-linked currencies stabilized.
Oil rebounded following a selloff on Monday as investors assessed the outlook for demand amid the rapid spread of omicron. Futures in London climbed above $72 a barrel on Tuesday after falling almost 5% over the past two days. Spot gold steadied at $1,790.60 an ounce, after dropping 0.4% Monday. Silver and palladium fell, while platinum was little changed. Copper advanced as China’s monetary easing and quicker-than-expected U.S. tapering drive metals trading ahead of the Christmas break. Copper rose 0.4% to $9,486.50 a metric ton. Other base metals also rose, with nickel gaining 0.8%. Iron ore in Singapore jumped as much as 4% to $129.45 a ton, the highest since mid-October, before settling at $128.10.
We in for a better start, with IG markets calling us up 870 points. Tencent trades 1.9% higher in HK and the Ausi Metals & Mining index also gaining 1.06% on higher commodity prices. The Rand is stronger at around the 15.77 level vs the USD.
Here are some events to watch this week:
- EIA crude oil inventory report Wednesday
- Bank of Japan Governor Haruhiko Kuroda speaks Thursday
- U.S. consumer income , new home sales, U.S. durable goods, University of Michigan consumer sentiment, initial jobless claims. Thursday
- Friday: U.S. markets are closed. European markets close earlier
Locally the FTSE/JSE Africa All-Share Index slid 1.6% to 70,087.63, following a global retreat in equity markets amid growing concern over the omicron variant’s impact on economic recovery. Precious Metals & Mining stocks weighed the most with the sector shedding 3.6%. Impala (-5.4%), Goldfields (-3.9%) and Sibanye (-3.1%) were amongst the biggest losers, with Sasol also shaving 4.1% off its previous close on lower oil prices. Banks and retailers didn’t escape the sell-off with the sectors closing down 2.1% and 2.2% respectively, despite a slightly stronger currency. The Rand was up 0.7% to 15.78 per US$, with the Yield on 10-year govt rand bonds that fell 5.70 bps to 9.70%
Former President Jacob Zuma will appeal a High Court order that he be returned to prison, after it found the medical parole he was granted in September was unlawful.
- South Africa Records Lowest Number of Covid Cases in Two Weeks
- South African Covid Hospitalizations at 8,435, With 6.7% in ICU
- Billionaire-Backed African Rainbow Buys Mothballed Platinum Mine
- Gold Holds Gains as Traders Weigh Omicron Risk, Monetary Policy
- Long4Life Offer From OMPE Bidco Increased to 6.20 Rand/Share
- Brait Raises 3b Rand Following Issuance of 3m Exchangeable Bonds
European markets closed sharply lower on Monday as the rapid spread of the omicron Covid-19 variant triggers stricter containment measures across the continent. The pan-European Stoxx 600 provisionally ended the session around 1.4% lower, with autos shedding 2.7% to lead losses as all sectors and major bourses slid into negative territory. The Netherlands entered full lockdown on Sunday until mid-January, and the possibility of tighter restrictions being imposed over the Christmas holidays and into the new year looms over a number of European countries amid an unprecedented surge in Covid-19 cases. From Monday, only German citizens, residents and transit passengers will be allowed to enter Germany from the U.K., with all inbound travelers required to quarantine for 14 days irrespective of vaccination status. Travel restrictions were also imposed for arrivals from Denmark, Norway and France. Austria will only allow entry to vaccinated travelers from Monday. On the data front, the euro zone’s current account surplus grew in October as an expansion of the bloc’s services trade surplus outweighed the contraction in goods trade. In terms of individual share price movement, Belgian biotech firm Argenx jumped more than 8% after the U.S. Food and Drug Administration approved a landmark drug. At the bottom of the Stoxx 600, Danish drugmaker Novo Nordisk tumbled over 11% after announcing Friday that it would be unable to meet demand for its new weight loss drug amid supply problems in the U.S.
The major averages fell on Monday as investors grappled with the resurgence of Covid cases spurred from the newfound omicron variant. The Dow Jones Industrial Average dropped 433.28 points to 34,932.16, dragged down by losses in Boeing, Goldman Sachs and American Express. The S&P 500 dipped 1.1% to 4,568.02 and the technology-focused Nasdaq Composite declined 1.2% to 14,980.94. The small-cap benchmark Russell 2000 lost nearly 1.6%. The omicron variant is raging across to the world as the winter holiday season approaches. U.S. cases are jumping into year-end with more than 156,000 reported on Friday, according to data from the Centers for Disease Control and Prevention. Caterpillar, Boeing and General Electric all lost ground on Monday. The aircraft maker was off by about 2.2%. Caterpillar and General Electric fell 2.9% and 1.5%, respectively. Reopening plays were among the biggest losers once again on Monday. Las Vegas Sands shed 3.6%. Alaska Air Group and Southwest fell nearly 1.4% and 0.7%, respectively. Darden Restaurants also lost close to 1.3%. Energy stocks also dipped as U.S. oil prices fell. Devon Energy slid 2.4% and Exxon Mobil shed about 1.5%. Financials were in the red with Goldman Sachs down 2.6% and Wells Fargo down nearly 2.3%. JPMorgan and Bank of America also dropped 1.8% and 1.6%, respectively. While some tech stocks suffered, streaming giant Netflix bucked the broader market’s trend, adding nearly 1.2% on Monday. On the political front, Sen. Joe Manchin, a conservative Democrat from West Virginia, said Sunday he won’t support the Biden administration’s “Build Back Better” plan. Manchin’s decision will likely kill the $1.75 trillion social spending and climate policy bill as it stands now. Goldman Sachs cut its GDP forecast on the Manchin news, trimming its first quarter 2022 forecast to 2% from 3%. The firm also lowered its second-quarter and third-quarter growth forecasts.
Shares in Asia-Pacific rose in Tuesday trade as investors continued to monitor the situation surrounding the omicron Covid variant. Japanese stocks led gains regionally, with the Nikkei 225 in Japan rising 2.01% while the Topix index advanced 1.6%. South Korea’s Kospi climbed 0.41%. Mainland Chinese stocks rose, with the Shanghai composite up about 0.4% while the Shenzhen component advanced slightly. Hong Kong’s Hang Seng index gained 0.54%. Shares in Australia also rose as the S&P/ASX 200 gained 0.78%. MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.73% higher. Semiconductor stocks in Asia-Pacific rose in Tuesday trade after Micron delivered stronger-than-expected quarterly earnings. Shares of the U.S.-listed firm soared nearly 7% in afterhours trading on Monday. In Japan, shares of Tokyo Electron jumped almost 4% while Advantest gained 4.31%. Elsewhere in South Korea, shares of industry heavyweight Samsung Electronics gained 1.17% while SK Hynix surged 2.9%. Hong Kong-listed shares of SMIC also rose more than 1%. The Japanese yen traded at 113.65 per dollar, stronger than levels above 114 seen against the greenback last week. The Australian dollar was at $0.7111, still struggling to recover after last week’s decline from above $0.72.
Gold held a drop as investors weighed the efficacy of vaccines against the omicron virus variant and the outlook for President Joe Biden’s stymied economic agenda. Spot gold steadied at $1,790.60 an ounce, after dropping 0.4% Monday. The Bloomberg Dollar Spot Index was flat after falling 0.1% in the previous session. Silver and palladium fell, while platinum was little changed.
Oil rebounded following a broader market selloff on Monday as investors assessed the outlook for demand amid the rapid spread of omicron. Futures in London climbed above $72 a barrel on Tuesday after falling almost 5% over the past two days. Prices tumbled in the previous session on concerns about rising infections and after President Joe Biden’s economic plan suffered a setback.
Copper advanced as China’s monetary easing and quicker-than-expected U.S. tapering drive metals trading ahead of the Christmas break. Chinese banks are expected to further lower their loan prime rates next year following a cut for the first time in 20 months on Monday. Copper rose 0.4% to $9,486.50 a metric ton. Other base metals also rose, with nickel gaining 0.8%.
Iron ore extended its storming rebound from an 18-month low as moves in China to support its embattled real estate sector bolstered the demand outlook. Futures in Singapore have climbed more than 50% in just six weeks as demand prospects brighten. Authorities in China are encouraging banks to fund acquisitions of projects of distressed developers and pushing financially healthy property firms to make such purchases. In addition, domestic banks lowered borrowing costs for the first time in 20 months, and the People’s Bank of China earlier this month cut the amount of cash banks must hold in reserve to free up funds. Iron ore in Singapore jumped as much as 4% to $129.45 a ton, the highest since mid-October, before settling at $128.10. Dalian futures rose 3.3% while steel rebar and hot-rolled coil steadied in Shanghai.