China Tech Lifts Asian Stocks but U.S Futures are lower.

26/07/2022 Stocks in Asia received a kicker earlier from China’s technology sector, helping to alleviate some of the caution in global markets ahead of a hotly anticipated Federal Reserve interest-rate hike. An Asian share index pushed higher, with Alibaba Group Holding Ltd. leading the advance in China tech. The e-commerce giant plans to seek a primary listing in Hong Kong, paving the way for investors in China to directly buy its shares. S&P 500 and Nasdaq 100 futures were in the red but off the day’s lows. Sentiment had taken a knock from a late-day slide in retailer Walmart Inc. on a disappointing profit outlook. Its projection could fan worries about corporate prospects as the US flirts with a recession amid tightening monetary settings.

Locally, the rand held steady below R17 against the dollar yesterday, touching its best level in two weeks, with focus squarely on the US Federal Reserve’s monetary policy decision this week. The local currency extended the previous session’s gains, supported by the surprise 75 basis point interest rate hike by the SA Reserve Bank last week and breaking the key level of R16.80/$ and is currently at R 16.72/$. The JSE All closed down 0.47% with GFI and ANG been the big losers in the TOP 40 closing down 6.85 and 5.300 percent respectively. We should see the local market a bit firmer to start the day as Asia trades higher, Tencent is up 0.49% and IG Top 40 62 points.

South African President Cyril Ramaphosa scrapped license rules for private power generators in a sweeping overhaul of the energy industry to end electricity outages that are hobbling the economy.

  • PICK N PAY GROUP SALES FOR FIRST 18 WKS OF FY23 GREW 10.7%.
  • Woolworths FY Turnover & Concession Sales Grew 1.4% y/y
  • REINET NET ASSET VALUE/SHR EU31.38 AT JUNE 30
  • KUMBA 1H OPER PROFIT 20.58B RAND, -51% Y/Y, INTERIM DIV/SHR 28.70 RAND
  • S. African State Workers Lower Wage-Increase Demand to 6.5%: BD

ECONOMIC DATA:

  • 09:00: May Leading Indicator, prior 126.7

European markets closed mixed on Monday as investors braced for a big week of corporate earnings and a key monetary policy decision from the U.S. Federal Reserve. The pan-European Stoxx 600 closed up by just 0.09%, having initially dropped more than 0.4% in early trade. Banks jumped 1.7% while travel and leisure stocks fell 1%. Corporate earnings will also be a key driver of stock market movement in Europe, with UBSUnilever, LVMHCredit SuisseDeutsche,BankDaimlerShellBarclaysNestle and Renault among the major players reporting throughout the week. On the data front, a key business climate index for July from Germany’s Ifo Institute came in at 88.6 yesterday, its lowest level for more than two years, as business morale plunged as a result of spiraling energy prices and impending gas shortages.

U.S. stock futures are lower this morning after Walmart cut its profit forecast, sending retail stocks tumbling after hours. Dow futures fell by 120 points, or 0.38%. S&P 500 and Nasdaq 100 futures declined 0.3% and 0.39%, respectively. An after the close announcement from Walmart, which cut its quarterly and full-year profit estimates because of rising food inflation alarmed investors who deliberated the implications for other retail stocks. Walmart plunged nearly 9% in extended trading, and dragged other retailers with it. Target dropped 5% and Amazon fell 4%. Macy’s and Dollar General each declined 3%, while Costco shed 2%. During the normal trading session the S&P 500 added 0.1%. The Dow climbed 90.75 points, or 0.3%. The tech-heavy Nasdaq lagged, sliding 0.4%. All of the major averages are on track for their best month of the year. Today, the Federal Reserve will commence its two-day policy meeting. Traders are widely expecting a three-quarter percentage point hike.

Coca-Cola, McDonald’s and General Motors are set to report earnings today before the bell. Alphabet, Microsoft, Chipotle Mexican Grill, UPS and Enphase Energy will report after the bell.

In Asia, Hong Kong stocks rose more than 1% with heavyweight Alibaba jumping 6.02% after the company said in a press statement that it will be applying for a primary listing on the Hong Kong Stock Exchange, where its shares are already listed. If completed, the company will become a dual-primary listed company in Hong Kong and New York. That’s expected to happen before the end of 2022. The Hang Seng Tech index rose 1.5%. South Korea’s economy grew 0.7% in the second quarter compared with the first quarter of 2022, according to estimates released by the Bank of Korea. That compared to 0.4% growth expected by analysts in a Reuters poll. The country’s GDP grew 0.6% in the January to March quarter. The Kospi is up 0.33%. Elsewhere in the region, the S&P/ASX 200 in Australia was 0.33% higher, with the Aussie miners up 1.79%. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.38%

Gold prices are a tad higher on the back of a weaker dollar, but were stuck in a tight range as investors refrained from taking big bets ahead a possible aggressive U.S. interest rate hike. Spot Gold + 0.17% $ 1723, Platinum + 0.36%  $ 886 and Palladium + 0.21%  $ 2014.

Oil prices rose for a second day on increasing concerns about tightening European supply after Russia, a key oil and natural gas supplier to the region, cut gas supply through a major pipeline. Russia tightened its gas squeeze on Europe on Monday as Gazprom said supplies through the Nord Stream 1 pipeline to Germany would drop to just 20% of capacity. Russia’s cut in supplies will leave countries unable to meet its goals to refill natural gas storage ahead of the winter demand period. Germany, Europe’s biggest economy, faces potentially rationing gas to industry to keep its citizens warm during the winter months. Brent + 1.64%  $ 106.87 and Wti + 1.63%  $ 98.23.

The Week ahead :

  • Alphabet, Apple, Amazon, Microsoft, Meta earnings due this week
  • Bank of Japan minutes, Tuesday
  • IMF’s world economic outlook update, Tuesday
  • EU energy ministers emergency meeting, Tuesday
  • Fed policy decision, briefing, Wednesday
  • Australia CPI, Wednesday
  • US GDP, Thursday
  • Euro-area CPI, Friday
  • US consumer income, University of Michigan consumer sentiment, Friday
  • Some of the main moves in markets: