5 June 2020

Morning and a Happy Friday to you all

We are indicating a better start with the FTSE/JSE Top40 future up 250 points or 0.53% in line with better Asian markets and higher US & European futures. The ZAR has also strengthened 0.5%, below the 17 to the $ level again, with Brent Oil up 1.0%% and platinum & palladium both better. Gold slightly lower.

President Cyril Ramaphosa will visit the city of Cape Town to assess responses to the Covid-19 pandemic in the Western Cape province, which accounts for two-thirds of South Africa’s known infections

* (ABG SJ): Absa Ends 13-Year Sponsorship of Top South African Soccer League

(SA) May Gross Reserves fall to $52.77b, est. $53.5b, prior $53.0b
(SA) May Net Reserves Rise to $45.53, est. $45.9b, prior $45.5b


Yesterday the FTSE/JSE Africa All-Share Index closed down 0.8% to 53,204, with Naspers that lead the downside as well as the banking sector after FirstRand warned that earnings will be down more than 20%. The Rand has strengthened further from yesterday’s 16.92 per US$ level and has edged another 0.5% to 16.82 this morning, with the Yield on 10 year govt rand bonds that rose 8.9 bps to 8.738%

European markets were lower across the board as ECB expands crisis bond-buying program, with the pan-European Stoxx 600 that closed down 0.8% following the ECB decision, with all sectors turning negative. Auto shares were the worst performers, falling 1.7%. The euro zone’s central bank announced a 600 billion euro ($672 billion) expansion of its Pandemic Emergency Purchase Programme (PEPP), a larger increase than analysts had been expecting. The FTSE 100 shed 0.64% in London, the German DAX ended down 0.45% and in France the CAC gave up 0.21%.

US stocks were also lower last night, giving back some of the strong gains for June, as Wall Street grappled with disappointing jobs data and a late-day sell-off in tech shares. The S&P 500 slid 0.3% to 3,112 while the Nasdaq Composite dropped 0.7% to 9,615. It was the first decline in five sessions for both indexes. The Dow closed just above the flatline, advancing 11 points, or 0.1%, to 26,281. Shares of major tech companies pressured the broader market. Facebook and Netflix both dropped more than 1.6%. Amazon closed 0.7% lower while Alphabet and Apple were down by more than 0.8% each. Earlier in the session, the Nasdaq-100 index — which is made up of the 100-largest nonfinancial stocks in the Nasdaq Composite — hit an intraday record. However, the index ended the day down 0.8%.

Chart of the Nasdaq-100 hitting an intraday record high on June 4, 2020.

Amazon, PepsiCo, Costco and PayPal are among the stocks that drove the Nasdaq-100 back to record highs from its late-March low. Amazon shares have rallied nearly 30% since March 23 while PepsiCo is up 24%. Costco has gained over 8% in that time and PayPal is up more than 81%.

Asian stocks climbed this morning, poised to cap a second straight week of gains, as U.S. and European equity-index futures advanced. The dollar extended its slide for a third week and crude oil saw a modest gain. Shares in Japan and South Korea advanced, while indexes in Hong Kong and Australia are also up from earlier lower levels. The Nikkei is up 0.57%, the Hang Seng 0.60% better (Tencent softer, down 0.55%) and in OZ the ASX 200 is up 0.15%, with miners flat to slightly better, BHP up 0.06%, RIO +0.20% and South32 lower -0.87%.

Brent crude, the global benchmark, edged higher and rose above $40 a barrel as OPEC+ is set to extend production cuts to prop up the oil market after a breakthrough in high-stakes negotiations, and the cartel could meet as soon as this weekend to sign off on the deal. After almost a week of wrangling, OPEC+ leaders Russia and Saudi Arabia clinched a tentative deal with holdout member Iraq, according to a delegate.

Have a good day