Stocks Push Higher Amid Bets on Slower Fed Hikes

28/07/2022 Stocks rose in Asia this morning and the dollar fell as the prospect of a slower pace of Federal Reserve monetary tightening filtered across global markets. An Asian share gauge added just under 1%, but the gains were smaller than Wednesday’s 2.6% surge in the S&P 500 and 4.3% jump in the Nasdaq 100. A dip in futures suggested the US rally may cool. The Fed raised rates by 75 basis points for a second month, said such a move is possible again and reiterated its desire to fight inflation. Chair Jerome Powell added the pace of hikes will slow at some point and policy will be set meeting-by-meeting. That shift comes amid signs of an economic slowdown. 

Locally, the JSE was flat ahead of the Fed announcement. The Top 40 closed down just 0.05% despites NPN and PRX been down 3.06 and 2.39 percent respectively. MNP the top gainer up 3.98%. The Rand gained 1.2 % yesterday to R 16.71/$ and has gained further ground this morning to R 16.64/$. We in for a firmer start after a strong session in the U.S, Asia trades up across the region and Tencent is up 0.12%. IG Top 40 + 349 points. Afrimat raised R 680 mln in a accelerated book, the new shares were placed at R 50.85 a 7.2% percent discount to the last close.

AGL Results just out :

  • ANGLO AMERICAN 1H ADJ EPS $3.11, EST. $3.07S
  • ANGLO AMERICAN 1H ADJ PROFIT $3.79B, EST. $3.48B
  • ANGLO AMERICAN 1H NET DEBT $4.85B, EST. $5.39B
  • ANGLO AMERICAN INTERIM DIV/SHR $1.24 VS. $1.71 Y/Y

ECONOMIC DATA:

  • 11:00: Statistics South Africa releases mid-year population estimates
  • 11:30: June PPI MoM, est. 1.5%, prior 1.8%
  • 11:30: June PPI YoY, est. 15.6%, prior 14.7%

European markets are set for a higher open on Thursday as global stocks take heart from slightly less hawkish messaging from the U.S. Federal Reserve. Earnings continue to drive individual share price movement in Europe, with a slew of major companies reporting before the bell on Thursday. They include Barclays, Shell, EDF, TotalEnergies, Stellantis, Leonardo, Prada, Diageo and BT. On the data front, a key euro zone business climate and economic sentiment survey for July is due on Thursday, along with preliminary German inflation figures.

Overnight in the U.S, all S&P 500 sectors ended the day higher, with communications services posting its best daily performance since April 2020. During Wednesday’s regular trading session, the Dow gained 436.05 points, or 1.4%, the S&P 500 added 2.62% and the Nasdaq Composite closed 4.06% higher, boosted by shares of Alphabet and Microsoft. Shares of Meta Platforms dipped 3% in extended trading on the back of disappointing quarterly results while Ford gained more than 5% after a beat on the top and bottom lines, and as it raised its dividend. On the data front, Investors are looking for further clues into the state of the economy while awaiting the GDP number latter today.  Economists surveyed by Dow Jones expect the economy to have barely expanded last quarter after contracting 1.6% in the first. On the earnings front, investors are looking ahead to results from Apple, Amazon, Intel and Comcast later today.

Shares in the Asia-Pacific region were mostly higher on Thursday following the U.S. Federal Reserve’s decision to raise rates by 75 basis points to fight inflation, a move that was widely expected. Among the major markets, only Hong Kong shares slipped. The benchmark Hang Seng index was 0.37% lower following a rate hike by the central bank. Australia led gains, with the S&P/ASX 200 0.82% higher and the Aussie miners up 2.65%. The Kospi in South Korea advanced 0.81%, while Japan’s Nikkei 225 was 0.22% higher, MSCI’s broadest index of Asia-Pacific shares outside of Japan rose 0.59%.

Gold prices extended its gains after comments from the U.S. Federal Reserve chair Jerome Powell on future interest rate hikes sounded less hawkish than feared, dragging the dollar and Treasury yields lower. Gold is trading at a two week high, up 0.33% at $ 1740, Platinum is up 0.76% at $ 896 and Palladium up 0.69% at $ 2045.

Oil prices edged higher, extending gains from the previous session, buoyed by lower crude inventories and higher gasoline demand in the United States. U.S. crude oil stockpiles fell by 4.5 million barrels last week, while U.S. gasoline demand rebounded by 8.5% week on week. Exports also climbed to a record high as WTI traded at a steep discount to Brent, making purchases of U.S. crude grades more attractive to foreign buyers. Russia has cut gas supply via Nord Stream 1 its main gas link to Europe to just 20% of capacity. That could lead to switching to crude from gas and prop up prices for oil in the short term.

The Rest of the week :

  • US GDP, Thursday
  • Euro-area CPI, Friday
  • US consumer income, University of Michigan consumer sentiment, Friday
  • Some of the main moves in markets: