Broad Based Gains in Gold Mining Sector, Omicron Damper On Global Energy Demand

  • Market Overview
  • Editor's Pick

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, buoyed by broad based gains in gold mining sector stocks, despite global concerns about the Omicron variant of COVID-19.
  • Gold Fields (JO: GFIJ ), AngloGold Ashanti (JO: ANGJ ) and Sibanye Stillwater (JO: SSWJ ) surged 8.9%, 7.0% and 4.3%, respectively.
  • Real estate property sector stocks, Arrowhead Properties, Dipula Income Fund (JO: DIBJ ) and Attacq (JO: ATTJ ) advanced 6.8%, 3.3% and 1.5%, respectively.
  • Platinum mining companies, Impala Platinum (JO: IMPJ ) Holdings, Anglo American (JO: AMSJ ) Platinum and Royal Bafokeng Platinum (JO: RBPCBe ) soared 5.8%, 4.9% and 4.0%, respectively.
  • Financial sector companies, Capitec Bank (JO: CPIJ ) Holdings, Absa (JO: ABGJ ) Group and FirstRand (JO: FSRJ ) gained 3.3%, 1.6% and 1.1%, respectively.
  • The JSE All Share index advanced 0.7% to close at 70,475.02.

UK MARKET REVIEW

  • The UK market finished weaker yesterday, as concerns about the Omicron variant of coronavirus weighed on investor sentiment.
  • Retailers, Just Eat Takeaway.com N.V., J Sainsbury (OTC: JSAIY ) and Kingfisher (LON: KGF ) shed 4.8%, 4.5% and 2.8%, respectively.
  • Travel and leisure sector companies, InterContinental Hotels Group (LON: IHG ), International Consolidated Airlines Group (LON: ICAG ) SA and Whitbread (LON: WTB ) declined 3.3%, 2.7% and 2.5%, respectively.
  • Telecommunications company, BT Group (LON: BT ) dropped 2.9%.
  • On the contrary, mining sector companies, Anglo American and BHP Group (JO: BHPJ ) advanced 3.3% and 2.4%, respectively.
  • Banking firms, NatWest Group (LON: NWG ), HSBC Holdings (LON: HSBA ) and Barclays (LON: BARC ) climbed 1.1%, 0.7% and 0.5%, respectively.
  • Real estate company, Taylor Wimpey (LON: TW ) gained 1.5%.
  • The FTSE 100 index declined 0.7% to close at 7,059.45.

US MARKET REVIEW

  • US markets ended lower yesterday, after the US Federal Reserve (Fed) Chairman, Jerome Powell stated that its time to taper the central bank’s monthly asset purchases.
  • Further, he withdrew the Fed’s depiction for inflation as “transitory”.
  • Regeneron Pharmaceuticals shed 2.7%, following reports that the company’s President and Chief Scientific Officer, George Yancopoulos stated that the company’s antibody treatment loses effectiveness against the omicron coronavirus variant, but its full impact won’t be known until further testing is completed in coming weeks.
  • salesforce.com (NYSE: CRM ), Microsoft (NASDAQ: MSFT ) and Intel (NASDAQ: INTC ) declined 4.0%, 1.8% and 1.6%, respectively.
  • The S&P 500 index fell 1.9% to settle at 4,567.00, while the DJIA index declined 1.9% to close at 34,483.72.
  • The NASDAQ index eased 1.6% to end the trading session at 15,537.69.

ASIA MARKET REVIEW

  • Asian markets are trading higher this morning, despite overnight losses on Wall Street.
  • In China, factory activity deteriorated in November, leading to concerns about Chinese economic growth.
  • In Japan, air conditioner manufacturing company, Daikin Industries (T: 6367 ) has added 4.0%.
  • On the flipside, financial sector company, Softbank Group Corp. (T: 9984 ) has shed 1.7%.
  • In Hong Kong, banking firm, CITIC has gained 3.7%. However, Sands China (HK: 1928 ) has declined 3.9%.
  • In South Korea, technology company, Samsung Electronics (KS: 005930 ) has added 2.5%. Meanwhile, Century has plummeted 14.0%.
  • The Nikkei 225 index is trading 0.5% higher at 27,971.23.
  • The Hang Seng index has risen 1.4% to trade at 23,793.38, while the Kospi index is trading 2.1% higher at 2,898.50.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices rose 0.8% to trade at $70.32/bl, reversing the previous session’s losses, as investors’ look ahead towards OPEC+’s decision on whether to release more oil into the market or restrain supply amid soaring oil prices and fears about the Omicron coronavirus variant dampening the global energy demand.
  • Yesterday, Brent spot prices fell 4.3% to settle at $69.75/bl, amid worries about a dent in demand for crude oil after Moderna (NASDAQ: MRNA )'s Chief Executive Officer, Stéphane Bancel casted doubts on the efficacy of its COVID-19 vaccines against the Omicron coronavirus variant. The American Petroleum Institute (API) reported that crude oil inventories declined by 0.75mn bls for the week ended 26 November.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 2.5% to $5.49/bushel.
  • At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,777.95/oz. Yesterday, gold declined 0.6% to close at $1,774.52/oz, as a stronger greenback dampened demand for the safe haven yellow metal.
  • Yesterday, copper declined 1.5% to close at $9,515.50/mt. Aluminium closed 0.2% lower at $2,634.75/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In South Africa, the unemployment rate recorded an increase in 3Q21. In the US, the house price index advanced in September. Meanwhile, the S&P/Case Shiller's home price index rose less than expected in September. Further, consumer confidence eased to a nine-month low in November, on account of continued worries about soaring energy prices. The Chicago Fed purchasing managers index (PMI) dropped more than expected in November. The Fed Chairman, Jerome Powell stated that it’s time to taper the central bank’s monthly asset purchases. Further, he withdrew the Fed’s depiction for inflation as “transitory”. The Fed Vice Chairman, Richard Clarida stated that the Fed officials are not happy with higher inflation running above the central bank's 2.0% target and it would not be a success for those inflation levels to be repeated next year.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 8.04%. Further, the yield on 2023 bond declined to 5.05%, while that for the longer-dated 2030 issue fell to 9.75%.
  • At 06:00 SAST, the US dollar is trading 0.4% lower against the South African rand at R15.8244, while the euro is trading 0.5% lower at R17.9235. At 06:00 SAST, the British pound has declined 0.3% against the South African rand to trade at R21.0664.
  • Yesterday, the euro declined against most of the major currencies. In Germany, unemployment dropped in November, as companies hired more employees to complete pending orders. Meanwhile, inflation in the eurozone rose to record highs in November, amid soaring energy prices.
  • At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1326, while it has weakened 0.2% against the British pound to trade at GBP0.8509.

ECONOMIC UPDATES

  • In October, the private sector credit in South Africa advanced 1.29% on an annual basis, less than market expectations for an advance of 1.7%. The private sector credit had registered a rise of 1.6% in the previous month.
  • The unemployment rate recorded a rise to 34.9% in South Africa, in 3Q 2021, compared with a reading of 34.4% in the prior quarter.
  • South Africa had posted trade surplus of R19.78bn in October, from a trade surplus of R22.20bn in the prior month.
  • The final gross domestic product (GDP) in France rose 3.0% on a QoQ basis in 3Q 2021, meeting market expectations of a rise of 3.0%. GDP had registered a revised rise of 1.3% in the previous quarter. The preliminary figures had also recorded a rise of 3.0%.
  • In Germany, the seasonally adjusted unemployment rate registered a drop to 5.3% in November, compared with a level of 5.4% in the previous month. Markets were anticipating unemployment rate to fall to 5.3%.
  • The final GDP rose 2.6% on a QoQ basis in Italy, compared with a rise of 2.7% in the previous quarter. The preliminary figures had also indicated a rise of 2.6%. Market expectations were for the GDP to rise 2.6%.
  • In November, on a MoM basis, the flash consumer price index climbed 0.5% in the eurozone. In the previous month, the consumer price index had advanced 0.8%.
  • The Chicago Fed purchasing managers index (PMI) in the US fell to a level of 61.80 in November, compared with a reading of 68.40 in the prior month. Markets were anticipating the Chicago Fed PMI to fall to a level of 67.00.
  • In Canada, the GDP rose 0.1% on a monthly basis in September, at par with market expectations of a rise of 0.1%. The GDP had recorded a revised rise of 0.6% in the previous month.
  • On a QoQ basis in Australia, the seasonally adjusted GDP eased 1.9% in 3Q 2021, lower than market expectations of a fall of 2.7%. GDP had advanced 0.7% in the previous quarter.
  • The final manufacturing PMI registered a rise to 54.50 in Japan. In the previous month, manufacturing PMI had registered a level of 53.20. The preliminary figures had indicated a rise to 54.20.
  • In November, Caixin/Markit manufacturing PMI index eased to 49.90 in China, compared with a level of 50.60 in the previous month. Markets were anticipating Caixin/Markit manufacturing PMI index to ease to a level of 50.50.

CORPORATE UPDATES

SOUTH AFRICA

  • FirstRand Limited (JO: FSRJ ): The bank holding company, in its 1H22 trading statement, reported that it expects its EPS to be at least 258.10c as compared with an EPS of 198.50c posted in the previous corresponding period. It expects its HEPS to be at least 258.60c as compared with a HEPS of 198.90c recorded in the prior corresponding period.
  • Vukile Property Fund Limited (JO: VKEJ ): The real estate investment trust company, in its 1H22 results, revealed that its gross property revenue rose to R1.75bn from R1.39bn posted in the corresponding period of the previous year. Its diluted EPS increased from the same period of the prior year to 88.15c.
  • Alexander Forbes Group Holdings (JO: AFHJ ) Limited: The financial services company has announced that it entered into a sale and purchase agreement with the shareholders of EBS International Proprietary Limited (EBS) in terms of which it will acquire 100.0% of the issued share capital in EBS.
  • Nampak Limited (JO: NPKJ ): The paper & packaging company, in its FY21 trading statement, indicated that it expects its EPS to be between 28.30c and 32.70c, compared with a loss per share of 537.70c in the prior year. It expects its HEPS to be between 55.10c and 64.90c, compared with a headline loss per share of 87.70c in the prior year.
  • Aspen (JO: APNJ ) agrees terms with Johnson & Johnson for own brand of Covid-19 vaccine: Aspen Pharmacare, SA’s biggest pharmaceutical manufacturer, has agreed terms for a deal with Covid-19 vaccine manufacturer Johnson & Johnson to produce its own branded version to sell in Africa, it announced.

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