Market Overview - 19th February 2021

South Africa Market Review

• South African markets closed in the red yesterday, pulled down by losses in gold mining sector stocks and amid concerns that rising borrowing costs could stifle a recovery in the world’s biggest economy.
• Gold Fields and Harmony Gold Mining dropped 3.6% and 1.7%, respectively.
• Banking firms, Capitec Bank (JO:CPIJ) Holdings, Nedbank Group Ltd (JO:NEDJ) and FirstRand (JO:FSRJ) declined 1.7%, 0.7% and 0.1%, respectively.
• On the other hand, platinum mining firms, Impala Platinum (JO:IMPJ) Holdings, Anglo American (JO:AMSJ) Platinum and Northam (JO:NHMJ) Platinum gained 2.4%, 2.3% and 1.6%, respectively.
• The JSE All Share index declined 0.8% to close at 66,575.45.

UK Market Review

• The UK market finished weaker yesterday, on account of a stronger pound and amid losses in banking sector stocks.
• Barclays (LON:BARC) fell 4.4%, even after the company reinstated its dividend and announced that it would buy back up to GBP700.00mn of shares.
• Peers, NatWest Group (LON:NWG) and Lloyds Banking (LON:LLOY) dropped 3.9% and 3.7%, respectively.
• Smith & Nephew (LON:SN) plunged 5.9%, after the company posted a decrease in its FY20 profits, as the Covid-19 pandemic forced the cancellation of elective procedures.
• On the flipside, home builders, Barratt Developments (LON:BDEV), Taylor Wimpey (LON:TW) and Persimmon (LON:PSN) rose 0.9%, 0.6% and 0.5%, respectively.
• The FTSE 100 index declined 1.4% to close at 6,617.15.

US Market Review

• US markets ended lower yesterday, as a rise in bond yields escalated worries over potential inflation, amid elevated commodity and energy prices.
• Walmart (NYSE:WMT) plunged 6.5%. Meanwhile, the company approved a $20.00mn buyback program and predicted fiscal 2022 net sales to rise in the low single digits.
• On the contrary, Hormel Foods (NYSE:HRL) gained 1.1%, after the company reported better-than-expected 1Q21 results.
• Marriott International rose 0.5%, even after the company posted a 4Q20 loss and weaker-than-expected revenue.
• The S&P 500 index fell 0.4% to settle at 3,913.97, while the DJIA index declined 0.4% to close at 31,493.34.
• The NASDAQ index eased 0.7% to end the trading session at 13,865.36.

Asia Market Review

• Asian markets are trading lower this morning, tracking overnight losses on Wall Street. Moreover, higher longer-dated bond yields and underwhelming US data dented investor confidence in a faster economic recovery from the COVID-19 pandemic.
• Also, in Japan, core consumer prices declined in January 2021.
• In equity markets, in Japan, Sony (T:6758) has dropped 0.6%.
• In Hong Kong, Sunny Optical Technology Group Co Ltd (HK:2382) has declined by 2.6%. In South Korea, a technology company, Samsung Electronics (KS:005930) has shed 0.7%.
• The Nikkei 225 index is trading 1.0% lower at 29,919.55.
• The Hang Seng index is trading 0.9% weaker at 30,330.98, while the Kospi index is trading 0.3% lower at 3,076.03.

Commodities

• At 06:00 SAST today, Brent spot prices fell 1.8% to trade at $62.25/bl, extending the previous session’s losses.
• Yesterday, Brent spot prices fell 2.0% to settle at $63.40/bl, on account of worries that refineries shut by a big freeze in the US will dent crude oil demand. Meanwhile, the US Energy Information Administration (EIA) reported that US crude inventories fell more-than-expected by 7.30mn bls for the week ended 12 February.
• Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.6% to $5.33/bushel.
• At 06:00 SAST today, gold prices declined 0.5% to trade at $1,767.53/oz. Yesterday, gold marginally declined to close at $1,775.67/oz, as investor optimism for a global economic recovery raised US Treasury yields and sapped demand for the safe haven metal.
• Yesterday, copper rose 2.0% to close at $8,573.25/mt. Aluminium closed 1.0% higher at $2,122.13/mt.

Currencies

• Yesterday, the South African rand strengthened against the US dollar, as the greenback weakened amid concerns about future inflation and signs of weakness in the US labour market. In the US, on the data front, the number of people filing first-time applications for unemployment benefits unexpectedly increased for the week ended 12 February, raising the possibility of a second straight month of tepid job growth despite declining new COVID-19 infections. Housing starts fell more-than-expected in January, amid soaring lumber prices, though a surge in permits for future construction suggested that the domestic housing market remained supported by historically low mortgage rates.
• The yield on benchmark government bonds mostly rose yesterday. The yield on 2026 bond fell to 6.99%. Further, the yield on 2023 bond advanced to 4.81%, while that for the longer-dated 2030 issue rose to 8.75%.
• At 06:00 SAST, the US dollar is trading 0.3% higher against the South African rand at R14.6337, while the euro is trading 0.2% higher at R17.6842. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R20.4180.
• Yesterday, the euro advanced against most of the major currencies, after the eurozone consumer confidence picked up more-than-expected in February, despite continued economic lockdowns to curb the spread of the COVID-19 pandemic.
• At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.2084, while it has gained 0.1% against the British pound to trade at GBP0.8661.

Economic Updates

• The flash consumer confidence index in the eurozone rose to a level of -14.80 in February, compared to a level of -15.50 in the previous month. Markets were expecting the consumer confidence index to advance to -15.00.
• In the US, the seasonally adjusted number of initial jobless claims recorded an unexpected rise to 861.00K in the week ended 13 February 2021, compared to a revised level of 848.00 K in the prior week.
• Housing starts dropped 6.0% in the US on a monthly basis, in January. Housing starts had climbed by a revised 8.2% in the prior month.
• On a monthly basis, building permits climbed 10.4% in the US, in January. In the previous month, building permits had risen by a revised 4.2%.
• The Philadelphia Fed manufacturing index in the US registered a drop to 23.10 in February, lower than market expectations of a fall to a level of 20.00. In the prior month, the Philadelphia Fed manufacturing index had recorded a reading of 26.50.
• In Canada, the house price index rose 0.27% on a monthly basis, in January. The house price index had registered a rise of 0.58% in the previous month.
• The national consumer price index (CPI) in Japan eased 0.6% in January on an annual basis. The national CPI had fallen 1.2% in the previous month.
• The flash manufacturing PMI registered a rise to 50.60 in Japan, in February, compared to a reading of 49.80 in the prior month.
• In Japan, the flash Nikkei Japan services PMI registered a drop to 45.80 in February. Nikkei Japan services PMI had registered a level of 46.10 in the previous month.

CORPORATE UPDATES

SOUTH AFRICA

• Sibanye Stillwater (JO:SSWJ): The gold mining company, in its FY20 results, indicated that its revenue rose to R127.39bn from R72.93bn posted in the corresponding period of the previous year. Its diluted EPS increased from the same period of the prior year to 1,055.00c.
• Gold Fields (JO:GFIJ): The gold mining company, in its FY20 results, reported that its revenue advanced from the preceding year to $3.89bn. Its diluted EPS stood at 81.00c, compared with 19.00c recorded in the previous year.
• Truworths International (JO:TRUJ): The investment holding and management company, in its 1H21 results, stated that its revenue decreased to R9.89bn from R11.03bn posted in the corresponding period of the previous year. Its diluted EPS fell 15.3% from the same period of the prior year to 307.60c.
• Aveng Limited: The construction company, in its 1H21 trading update, stated that the Group is expected to report an overall operating and net profit after tax for the six months ended 31 December 2020. It expects its HEPS to be between 0.40c and 0.80c and EPS to be between 2.10c and 2.50c.
• South32 (JO:S32J): Despite distractions caused by the state capture inquiry and the Covid-19 pandemic, South32 is confident that the sale of its SA coal business to Seriti Resources remains on track to be completed in the next six weeks.