Markets WRAP: Rand closes at R14.4236/$

Stocks fall as trade war hits tech

Todd White, Bloomberg

US equity futures dropped alongside stocks in Europe as the fallout of White House moves against Chinese telco giant Huawei rippled through the technology industry.

Bonds pared an earlier loss while crude oil advanced.

Contracts on the Nasdaq 100 led US declines and pointed to a weak opening in New York, while software and chip maker shares helped pull the Stoxx Europe 600 index lower.

Equities were mixed across Asia, but they rallied in Australia and the nation’s currency jumped after a surprise election victory for conservative Prime Minister Scott Morrison.

China’s offshore yuan strengthened, signaling some relief after trade turmoil dragged down the currency to a five-month low. The euro steadied after five days of declines as elections for the European Parliament approached.

Treasury 10-year note yields erased an earlier advance to trade little changed.

Markets remain on edge as the trade war develops, with the impact of the White House’s threats to choke Huawei reverberating across the global supply chain on Monday and hitting some of the biggest component-makers.

In the absence of fresh headlines on the protectionist showdown, attention will also turn to a slew of US data this week as well as Federal Reserve policy-meeting minutes on Wednesday.

“The baseline scenario is not bad” for global growth, Philipp Hildebrand, vice chairman at BlackRock, said in a Bloomberg TV interview. “It’s really a risk story. So far we don’t see much of it being manifested in the hard data. It’s really the re-ordering of the global trading system that’s at stake here.”

Elsewhere, crude climbed after Saudi Arabia and other key producers in OPEC signaled their intention to keep oil supplies constrained for the rest of the year, while pledging to prevent any genuine shortages. In India, shares surged as exit polls showed Prime Minister Narendra Modi was poised to retain power.

The rand regained some ground against the dollar on Monday morning after weakening late last week, but is expected to remain under pressure as trade tensionsbetween the US and China take centre stage.  

The local currency was changing hands at 14.36/$ at 10:15 on Monday after opening at R14.41 to the greenback.

Stocks mixed as trade war simmers, dollar steady

Adam Haigh, Bloomberg

Shares were mixed in Asia and the dollar steadied as investors awaited the next chapter in the Sino-American trade dispute.

Australian and Indian assets outperformed following elections in the two countries. Stocks in Japan were little changed, while they declined in China and Hong Kong.

Australian stocks climbed and the Aussie jumped after a surprise election victory for conservative Prime Minister Scott Morrison.

Indian shares surged as exit polls showed Prime Minister Narendra Modi is poised to retain power. US equity futures gained, while European contracts tipped a muted market open.

China’s offshore yuan strengthened, showing some relief after trade turmoil dragged down the currency to a five-month low. The yen slipped as unexpected economic growth in Japan came with reasons for caution.  

Markets remain fragile after the escalation in the trade war, with China calling on the US to negotiate on equal footing and Foreign Minister Wang Yi telling Secretary of State Mike Pompeo in a call that while it’s still possible to work out a deal, Beijing must safeguard its interests.

A slew of US data this week from home sales to manufacturing may offer some clues on the robustness of the economic expansion and Wednesday brings minutes from the Federal Reserve’s latest policy meeting.   

“Right now, cash levels are at quite elevated levels and investors have money to put back into the market,” Michael Metcalfe, global head of macro strategy at State Street, told Bloomberg TV in Hong Kong. “That dry powder, that potential for cash to come back in, means that once we get a resolution of the trade war and once we start to see better economic data, as we’ve just seen in Japan for instance, then that money is going to get dragged back out of cash into the market.”  

Elsewhere, crude climbed after Saudi Arabia and other key producers in OPEC signaled their intention to keep oil supplies constrained for the rest of the year, while pledging to prevent any genuine shortages. Treasury yields ticked higher.

Top US tech giants begin to cut off vital Huawei supplies

Top US corporations from chipmakers to Google have frozen the supply of critical software and components to Huawei, complying with a Trump administration crackdown that threatens to choke off China’s largest technology company.

Chipmakers including Intel, Qualcomm, Xilinx and Broadcom have told their employees they will not supply Huawei till further notice, according to people familiar with their actions.

Oil jumps as OPEC signals continued cuts and US threatens Iran

Oil started the week strongly after Saudi Arabia and other OPEC+ members signaled intentions to keep supplies constrained for the rest of the year, while US tensions with Iran ratcheted up as President Donald Trump threatened the country in a tweet.

Futures in New York rose as much as 1.7%, following a 1.8% gain last week. Saudi energy minister Khalid Al-Falih urged members of the alliance meeting in Jeddah to “stay the course” on output cuts. Meanwhile, just weeks after the US increased sanctions pressure on Iranian crude exports, Trump tweeted “If Iran wants to fight, that will be the official end of Iran.”