Asia Stocks Steady After U.S. Rally to Record High

24/12/2021 Asian stocks are steady this morning after U.S. shares reached an all-time high amid optimism that the economic recovery will shrug off the outbreak of the omicron virus strain. Japan’s market fluctuated and China dipped. But casino firms rallied in Hong Kong on favorable results from Macau license-renewal hearings. Volumes have thinned and many markets are closed or operating with reduced hours on Christmas Eve. Sentiment has been helped by economic data that painted a picture of solid U.S. growth, and a U.K. study suggesting omicron infections are less likely to lead to hospitalization. But the research cautioned the fast-spreading variant may still produce a significant number of serious cases. Investors shifted from havens toward riskier assets. The latest U.S. data showed that consumer sentiment improved, new home sales increased, durable goods orders beat forecasts and jobless claims signaled further labor market healing. But inflation-adjusted consumer spending stagnated, flagging risks from rapidly rising prices. U.S. markets are closed. U.K. markets close earlier.
Brent oil futures in London slipped 0.7% toward $76 a barrel. Gold neared the highest in a month as investors weighed uncertainty around the U.S. economic outlook and the outbreak of the omicron virus strain. Spot prices added 0.2% to $1,811.64 an ounce. Silver and palladium also rose, while platinum was little changed. The three-month LME copper contract is 0.1% higher at $9622.0 a ton. Chinese iron ore is higher in early trade amid positive supply-demand trends. The most actively traded May iron ore contract on the Dalian Commodity Exchange rises 2.4% to CNY703.5 a ton.
We in for a better start with IG markets calling us up over 200 points. Tencent is slightly lower in HK down 0.35%, The Rand is stronger at around the 15.62 level vs the USD.
Locally the FTSE/JSE Africa All-Share Index closed up 0.5% to 71,684.10, mostly supported by Prosus and Naspers after Tencent saying it plans to distribute more than $16b of JD.com shares as a one- time dividend. Banks and retailers also closed in the green as the rand strengthened, with the sectors up 0.67% and 0.22% respectively. The Rand gained 0.4% to 15.64 per US$, with the Yield on 10-year govt rand bonds that fell 7.10 bps to 9.77 %.

South Africa continues to battle fourth wave of the Covid-19 pandemic as the Christmas holidays get underway.

  • South Africa Covid-19 Hospitalizations at 9,202 With 6.6% in ICU
  • South African Health Regulator Approves J&J Vaccine Boosters
  • Tencent Hands Out $16 Billion of JD Stock in Crackdown-Led Shift
  • Prosus, Naspers Shares Rise After Tencent Special Dividend Plans
  • LVMH, Moncler Seen as Safe Luxury Bets for 2022: Bernstein

ECONOMIC DATA:

  • 7am: Bloomberg Dec. South Africa Economic Survey
    EU/UK
    European stocks finished higher Thursday as traders looked to signs that the coronavirus omicron variant is not as severe as previously feared. The pan-European Stoxx 600 index closed up 1%, with travel and leisure climbing 1.7% to lead the gains amid optimism over Covid. Airline stocks were among the top performers, with British Airways parent company IAG and Hungarian budget carrier Wizz Air both rising about 2%. Investors reacted to a study out of South Africa — where the omicron strain was first discovered — suggesting a reduced risk of hospitalization and severe disease compared with delta. Italian Prime Minister Mario Draghi on Wednesday suggested he would be willing to become the country’s president, saying his government had laid the foundations for key work to continue. In corporate news, Ryanair on Wednesday said it was more than doubling its forecast for full-year losses, citing the emergence of travel restrictions in several big markets due to the coronavirus. Despite that forecast, the airline’s shares rose slightly on Thursday. Looking at other individual stocks, Germany’s United Internet fell less than 1% on Thursday after news that CEO Ralph Dommermuth has increased his equity ownership of the company to 50.1% but won’t make a voluntary acquisition offer to shareholders.

US
S&P 500 closes at a record following 3-day rebound from omicron sell-off. The major averages rose for a third day on Thursday as investors looked past earlier jitters about the spread of the omicron Covid variant. The Dow Jones Industrial Average added 196.67 points, or 0.55%, to 35,950.56. The S&P 500 rose 0.62% to 4,725.79 and closed at a record. The 500-stock average sits less than 0.4% from its intraday record high. The Nasdaq Composite gained 0.85% to 15,653.37. Thursday’s gains were broad across the board, although on light volume. Bank shares were higher, along with tech stocks Microsoft and Nvidia. Helping boost sentiment were new studies suggesting that omicron has a lower risk of hospitalization than other Covid variants. The Food and Drug Administration granted emergency use authorization for Pfizer’s Covid pill, the first oral antiviral drug against the virus. The FDA also authorized Merck’s antiviral pill for Covid-19 on Thursday. Reopening plays like airlines and cruise lines were some of the biggest winners this week during the comeback. Carnival Corp. rose nearly 16% since Monday. Hilton Worldwide rallied about 9.8% this week. Economic data out Thursday morning showed a strong economy with improving labor and spending trends, but inflation at uncomfortable levels. Jobless claims for the week ended Dec.18 came in about as expected at 205,000. Durable goods for November rose 2.5%, compared to the 1.5% Dow Jones estimate. Personal income and spending showed increases for November. But on the inflation side, the Federal Reserve’s closely watched core personal consumption expenditures index rose 0.6% in November from the month prior. Core PCE rose 4.7% year-over-year in November, higher than the 4.5% rate expected.

ASIA
Shares in Asia-Pacific were mixed in Friday trade, as some major markets in the region, including Hong Kong and Singapore, close early for Christmas Eve. Hong Kong’s Hang Seng index advanced 0.13% on the day to close at 23,223.76. Mainland Chinese stocks, on the other hand, declined. The Shanghai composite fell 0.38% while the Shenzhen component dipped 0.737%. In Japan, the Nikkei 225 sat fractionally higher while the Topix index shed earlier gains to decline about 0.1%. South Korea’s Kospi gained 0.61%. In Australia, the S&P/ASX 200 rose 0.44% to close at 7,420.30. Over in Southeast Asia, Singapore’s Straits Times index closed 0.37% higher at 3,108.28. MSCI’s broadest index of Asia-Pacific stocks outside Japan edged 0.13% higher. The Japanese yen traded at 114.31 per dollar, still weaker than levels below 113.5 seen earlier in the week. The Australian dollar was at $0.723, having risen from levels below $0.714 earlier this week.

COMMODITIES
Gold neared the highest in a month as investors weighed uncertainty around the U.S. economic outlook and the outbreak of the omicron virus strain. Former Treasury Secretary Lawrence Summers warned of a testing period for the U.S. economy in coming years, with the risk of recession followed by stagnation as the Federal Reserve has been late to spot the dangers of inflation. Bullion is still heading for the first annual loss in three years as central banks reduce pandemic-era stimulus to fight surging inflation. Spot prices added 0.2% to $1,811.64 an ounce. Silver and palladium also rose, while platinum was little changed.

Brent oil fell as trading volumes thinned moving into the holiday period, but was still heading for a weekly gain on signs that the omicron variant of the virus may be less severe than previous strains. Futures in London slipped 0.7% toward $76 a barrel.

Copper prices are higher in early Asian trade amid expectations of a recovery in the Chinese property sector. Property-sector-related “concern around 2022 copper demand is overblown, “Goldman Sachs says. It forecasts total Chinese demand for copper to rise 4.5% next year compared with its earlier estimate of 3.0%. The investment bank adds that low copper inventories will also support prices, and recommends a long Dec. 2023 LME copper flat-price position. The three-month LME copper contract is 0.1% higher at $9622.0 a ton.
Chinese iron ore is higher in early trade amid positive supply-demand trends. Jefferies notes that China has been importing less of the steelmaking material from Brazil and Australia, while at home, consumption of hot-rolled coil- a type of steel–is rising, which should boost demand for iron ore. However, it notes that iron ore inventory levels at Chinese ports remain high, which may cap the commodity’s price gains. The most actively traded May iron ore contract on the Dalian Commodity Exchange rises 2.4% to CNY703.5 a ton.