03/08/2022 Stock markets in Asia mixed on Wednesday following U.S. House Speaker Nancy Pelosi’s safe arrival in Taiwan, despite threats of action from China. Beijing announced to conduct military drills encircling Taiwan from Aug 4-7. US treasuries trimmed a plunge and the dollar continued its climb after Federal Reserve officials signalled they are nowhere near done raising interest rates. Chicago Fed President Charles Evans said on Tuesday that a 50 basis points rate hike would be a reasonable assessment for the September policy meeting if inflation does not improve.
MSCI Asia index was firm 0.11% during early trading, supported by gains in Japan and Hong Kong. Tencent gaining 2.6%. Taiwan’s stock benchmark was about flat, while Australian equities declined on course to snap a six-day winning streak. Australian retail sales print showed an increase of 1.4%, versus 1.2% expectations. Wall Street futures remain steady, while European contracts retreated.
Brent crude dropped 0.49% to trade $100.06 ahead of an OPEC+ crude production meeting on Wednesday. Gold climbed, firm 0.50% at $1769, and Bitcoin dropped under $23,000.
What remains of the week:
- OPEC+ meeting on output, Wednesday
- US factory orders, durable goods, ISM services, Wednesday
- BOE rate decision, Thursday
- US initial jobless claims, trade, Thursday
- Cleveland Fed President Loretta Mester due to speak, Thursday
- US employment report for July, Friday
The JSE tracked weaker global markets on Tuesday, closing 0.93% weaker. The biggest falls came from industrial metals and mining, down 2.08%, and general retailers, which lost 2.87%. The rand slipped from R16.5300/$ levels to currently hover around R16.7300/$ as Eskom warned about power cuts at short notice. Top-40, on IG markets, called up +80 points.
Shares in Telkom tumbled on Tuesday as it flagged a more than double-digit fall in core profit for its first quarter to end-June. Analysts say the results are likely to strengthen MTN’s resolve to take over the partially government-owned operator. For some, the earnings report is proof that Telkom would be better off within the MTN stable.
Implats-RBPlats merger proceedings postponed so that government can hash out framework agreement.
- Prosus Bought Back €218.3M of Shares From July 25 TO 29
- MEI SJ, IVT SJ
- 09:15: July S&P Global South Africa PMI, est. 50.5, prior 52.5
- Annual General Meetings: AFT SJ
Shares in Europe closed in the red on Tuesday as US-China tensions escalated, although BP remained a bright spot after well-received second-quarter results. Euro Stoxx600 slipped 0.32% on the day, while London’s FTSE100 ended the session flat 0.06%. European futures trimmed earlier losses, with the DAX futures flat, FTSE futures firm 0.15%, alongside Euro Stoxx futures gaining 0.11%.
The National Institute of Economic and Social Research (NIESR) said Britain was sliding into a recession that will cost millions of households their savings unless the government increases support for households immediately. The leading think tank sees: (1) UK GDP seen growing just 0.5% in 2023 – NIESR, (2) Households with no savings to double to 5.3 million by 2024, (3) Some 1.2 million homes to lack enough money for food and heating.
Wall Street benchmarks closed in the red, no different from global peers. Dow gave up 0.23%, S&P500 retreated 0.67% and the Nasdaq slipped 0.16%. In the corporate space, brewer Molson Coors reported a drop in quarterly profits despite posting a fifth consecutive period of net sales growth. Twitter sent dozens of civil subpoenas this week to Morgan Stanley, co-investors in the deal including an affiliate of Brookfield Asset Management Inc. The social media giant is attempting to find evidence that Elon Musk tried to torpedo the financing of his $44 billion takeover deal. US futures, main three benchmarks, firm roughly 0.22% across the board this morning.
Australian retail sales posted a solid rise in real terms last quarter. Data showed on Wednesday that inflation-adjusted retail sales had risen 1.4% in the June quarter to A$94.3 billion. That topped market forecasts of a 1.2% increase. The ASX200 as last seen 0.41% down on the day weighed down by financials and utilities sector.
Japan’s services sector activity almost completely stagnated in July as rising inflation and growing economic uncertainty weighed on sentiment. Jibun Bank Japan PMI print came out at 50.2 for last month, prior 50.6. Nikke225 gained 0.45% China’s services activity grew at the fastest rate in 15 months in July, Caixin PMI Services print is at 55.5 vs 53.9 expectations, as easing COVID curbs boosted consumer confidence. Hang Seng gained 0.71%, supported by technology stocks, while the CSI300 was flat 0.07%