South Africa Market Review
South African markets closed in the green yesterday, shrugging off concerns of a tighter monetary policy in the US and its effect on global economic growth. Real estate companies, Dipula Income Fund (JO:DIBJ), Emira Property Fund (JO:EMIJ) and Fortress REIT jumped 13.5%, 3.6% and 3.0%, respectively. Gold miners, Harmony Gold Mining, AngloGold Ashanti (JO:ANGJ) and Gold Fields (JO:GFIJ) soared 7.2%, 4.7% and 4.0%, respectively. Platinum mining companies, Northam (JO:NHMJ) Platinum and Impala Platinum (JO:IMPJ) Holdings gained 4.5% and 3.2%, respectively. On the flipside, retail companies, Steinhoff International Holdings (JO:SNHJ) N.V. and Shoprite Holdings (JO:SHPJ) shed 4.4% and 1.5%, respectively. Banks, Capitec Bank (JO:CPIJ) Holdings, FirstRand (JO:FSRJ) and Absa (JO:ABGJ) Group declined 2.6%, 2.4% and 1.4%, respectively. The JSE All Share index advanced 0.3% to close at 71,035.00.
UK Market Review
The UK markets were closed yesterday on account of a public holiday. On Wednesday, the FTSE 100 index declined 1.0% to close at 7,532.95.
US Market Review
US markets ended higher yesterday, ahead of key US jobs report. Technology companies, salesforce.com (NYSE:CRM) and Apple (NASDAQ:AAPL) soared 7.0% and 1.7%, respectively. Pfizer (NYSE:PFE) added 0.6%, after the drugmaker completed its application to the Food and Drug Administration (FDA) to administer its COVID-19 vaccine to children under the age of 5. On the contrary, Hewlett Packard Enterprises plunged 5.2%, after the company issued a disappointing full year forecast and reported dismal earnings in 2Q22. The S&P 500 index rose 1.8% to settle at 4,176.82, while the DJIA index advanced 1.3% to close at 33,248.28. The NASDAQ index climbed 2.7% to end the trading session at 12,316.90.
Asia Market Review
Asian markets are trading higher this morning, tracking overnight gains on Wall Street. In Hong Kong, markets are closed today on account of a public holiday. In Japan, metals company, Pacific Metals has soared 6.4%. Pharmaceutical company, Sumitomo Pharma has added 3.3%. On the flipside, chemical company, Tosoh Corporation has shed 3.2%. Meanwhile, automotive company, Shoprite Holdings (TYO:6902) has eased 2.3%. In South Korea, Central Insight Company has jumped 18.3%. On the contrary, automobile company, SsangYong Motor (KS:003620) Company has plummeted 19.2%. Yesterday, the Hang Seng index closed 1.0% lower at 21,082.13. Today, the Nikkei 225 index is trading 1.1% higher at 27,727.37, while the Kospi index is trading 0.3% higher at 2,666.82.
Commodities
At 06:00 SAST today, Brent spot prices fell 1.6% to trade at $120.98/bl, reversing previous sessions gains.
Yesterday, Brent spot prices rose 2.8% to settle at $122.91/bl, amid drop in the US crude oil inventories. The US Energy Information Administration (EIA) reported that US crude inventories fell by 5.10mnbls for the week ended 27 May. Meanwhile, the OPEC and its allies agreed to raise its production target by 648,000bls a day in July and August.
Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.1% to $7.2425/bushel.
At 06:00 SAST today, gold prices advanced 0.1% to trade at $1,869.82/oz. Yesterday, gold gained 1.2% to close at $1,868.58/oz, as weaker dollar and geo-political tensions between Russia and Ukraine boosted demand for the safe haven yellow metal.
Yesterday, copper marginally declined to close at $9,498.50/mt. Aluminium marginally closed lower at $2,698.00/mt.
Currencies
Yesterday, the South African rand strengthened against the US dollar. In the US, private payrolls increased by much less than expected in May, amid slowdown in hiring due to recession fears. The new claims for unemployment benefits unexpectedly fell by 11,000 to 200,000, for the week ended 27 May, as stronger demand for labour helped underpin the economy. Meanwhile, new orders for manufactured goods increased less than expected in April, despite stronger demand.
The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 8.26%. Further, the yield on the longer-dated 2030 issue fell to 9.83%.
At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R15.4497, while the euro is trading 0.1% lower at R16.6217. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R19.4291.
Yesterday, the euro advanced against most of the major currencies. In the eurozone, producer price inflation accelerated at a slower than expected pace in April.
At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.0758, while it has gained 0.1% against the British pound to trade at GBP0.8554.
Economic Updates
On a MoM basis, in France, the flash consumer price index (ex-tobacco) rose 0.40% in April, compared to an advance of 1.40% in the prior month. Markets were expecting the consumer price index (ex-tobacco) to advance 0.20%.
In South Africa, electricity production registered a drop of 3.7% on an annual basis in April. In the previous month, electricity production had fallen 1.1%.
The consumer price index (CPI) in Switzerland registered a rise of 0.7% on a monthly basis in May, more than market expectations for a rise of 0.3%. In the prior month, the CPI had climbed 0.4%.
On a MoM basis, the producer price index (PPI) in the eurozone climbed 1.2% in April, less than market expectations for an advance of 2.3%. The PPI had advanced 5.3% in the previous month.
In the US, the private sector employment rose by 128.00K in May, compared with a revised increase of 202.00K jobs in the previous month.
In week ended 28 May 2022, the seasonally adjusted number of initial jobless claims dropped unexpectedly to a level of 200.00 K in the US, compared with a level of 210.00 K in the previous week.
In 1Q22, on a QoQ basis, the final non-farm business productivity in the US fell 7.3%, less than market expectations for a drop of 7.5%. The preliminary figures had indicated a drop of 7.5%. In the previous quarter, the non-farm business productivity had registered a revised rise of 6.3%.
The final unit labour costs in non-farm businesses recorded a rise of 12.6% on a QoQ basis in the US, in 1Q22. In the prior quarter, the unit labor costs in non-farm businesses had registered a revised rise of 1.0%. The preliminary figures had indicated an advance of 11.6%.
In April, on a MoM basis, the final non-defense capital goods orders (ex aircraft) in the US recorded a rise of 0.4%. In the previous month, the non-defense capital goods orders (ex aircraft) had recorded a revised rise of 1.1%. The preliminary figures had indicated a rise of 0.3%.
in April, on a MoM basis, the final durable goods orders in the US registered a rise of 0.5%. In the previous month, durable goods orders had risen by a revised 0.6%. The preliminary figures had recorded an advance of 0.4%.
On a MoM basis, in the US, factory orders rose 0.3% in April, less than market expectations of a rise of 0.7%. In the previous month, factory orders had risen 2.2%.
In Canada, building permits dropped 0.6% on a MoM basis in April. Building permits had fallen by a revised 6.3% in the prior month.
In Japan, the final Nikkei services PMI rose to a level of 52.60 in May, compared to a reading of 50.70 in the previous month. Markets were expecting the Nikkei services PMI to climb to a level of 51.70. The preliminary figures had recorded a rise to 51.70.
Corporate Updates
South Africa
Steinhoff Investment Holdings Limited: The retail company, in its 1H22 trading statement, indicated that it expects its EPS and HEPS to be between R261.00 and R270.00 as compared with an EPS of R49.42 and a HEPS of R48.90 posted in the corresponding period of the previous year.
Oceana Group Limited (JO:OCEJ): The fishing company, in its 1H22 results, reported that its revenues advanced 10.9% to R3.18bn from the same period of the preceding year. Its diluted EPS stood at 119.70c, compared with 262.00c recorded in the corresponding period of the previous year.
Oil slips amid talk of Saudi Arabia boosting output: Oil prices fell as investors cashed in on a recent rally ahead of a key producers meeting later in the day, with some speculation that Saudi Arabia may boost oil production in response to urging by the US.