South Africa Market Review
South African markets closed in the green yesterday, buoyed by broad based gains in pharmaceutical sector stocks and as investors expected for an increase in the US Federal Reserve’s (Fed) benchmark interest rate. Aspen (JO:APNJ) Pharmacare Holdings and Life Healthcare Group Holdings (JO:LHCJ) skyrocketed 10.4% and 1.7%, respectively. Retailers, Cie Financiere Richemont SA (JO:CFRJ), Massmart Holdings (JO:MSMJ) and Mr Price Group (JO:MRPJ) soared 7.5%, 7.3% and 4.7%, respectively. Financial firms, Absa (JO:ABGJ) Group, Capitec Bank (JO:CPIJ) Holdings and FirstRand (JO:FSRJ) jumped 7.5%, 6.1% and 3.8%, respectively. Real estate companies, Attacq (JO:ATTJ), Dipula Income Fund (JO:DIBJ) and Capital & Counties Properties (JO:CCOJ) surged 6.5%, 5.3% and 2.2%, respectively. The JSE All Share index advanced 4.0% to close at 73,484.30.
UK Market Review
The UK market finished firmer yesterday, as expectations of peace talks between Russia and Ukraine and a Chinese economic stimulus boosted investor sentiment. Miners, Polymetal International, Antofagasta (LON:ANTO) and Glencore (LON:GLEN) soared 13.9%, 6.6% and 2.8%, respectively. Financial firms, Barclays (LON:BARC), HSBC Holdings (LON:HSBA) and Lloyds Banking Group (LON:LLOY) advanced 4.2%, 3.1% and 2.6%, respectively. Real estate companies, Berkeley Group (LON:BKGH) Holdings, Barratt Developments (LON:BDEV) and Persimmon (LON:PSN) gained 4.3%, 3.5% and 3.3%, respectively. On the flipside, Avast (LON:AVST) plunged 13.3%, after Britain's anti-trust regulator began an in-depth investigation into the US cybersecurity firm, NortonLifeLock Inc's $8.60bn purchase of the company. The FTSE 100 index advanced 1.6% to close at 7,291.68.
US Market Review
US markets ended higher yesterday, after the US Fed increased its interest rate as expected and further indicated more increases and balance sheet reduction ahead. Starbucks (NASDAQ:SBUX) soared 5.2%, after the coffee making company announced the return of company founder, Howard Schultz as the Chief Executive Officer (CEO) on an interim basis, as Kevin Johnson, plans to step down on 4 April 2022. Technology companies, salesforce.com, Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT) advanced 4.8%, 4.1% and 2.5%, respectively. Financial firms, JPMorgan Chase (NYSE:JPM) and Goldman Sachs Group (NYSE:GS) gained 4.5% and 3.5%, respectively. The S&P 500 index rose 2.2% to settle at 4,357.86, while the DJIA index advanced 1.5% to close at 34,063.10. The NASDAQ index climbed 3.8% to end the trading session at 13,436.55.
Asia Market Review
Asian markets are trading higher this morning, tracking overnight gains on Wall Street. In Japan, financial firm, SoftBank Group Corporation (T:9984) has soared 6.6%. On the flipside, transport company, Kawasaki Kisen Kaisha (T:9107) has shed 2.6%. In Hong Kong, pharmaceutical company, WuXi Biologics (HK:2269) has jumped 15.1%. On the contrary, Geely Automobile Holdings (HK:0175) has eased 1.2%. In South Korea, technology company, Samsung Electronics (KS:005930) has gained 1.3%. On the other hand, Chin Yang Chemical Corporation (KS:051630) has plunged 5.0%. The Nikkei 225 index is trading 3.0% higher at 26,544.02. The Hang Seng index has advanced 5.7% to trade at 21,239.52, while the Kospi index is trading 1.8% higher at 2,707.12.
Commodities
At 06:00 SAST today, Brent spot prices rose 1.4% to trade at $103.17/bl, reversing previous session’s losses.
Yesterday, Brent spot prices fell 0.6% to settle at $101.73/bl, amid hopes for progress in Russia-Ukraine peace talks and as US crude oil inventories increased. The US Energy Information Administration (EIA) reported that US crude inventories advanced by 4.30mn bls for the week ended 11 March.
Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 3.8% to $7.04/bushel.
At 06:00 SAST today, gold prices advanced 0.5% to trade at $1,936.86/oz. Yesterday, gold gained 0.5% to close at $1,927.29/oz, as rising US bond yields and an increase in the Fed’s key interest rate dented demand for the safe haven yellow metal.
Yesterday, copper rose 2.0% to close at $10,056.00/mt. Aluminium closed 0.3% lower at $3,235.75/mt.
Currencies
Yesterday, the South African rand strengthened against the US dollar. In South Africa, retail sales accelerated in January on a yearly basis, buoyed by food and beverages as well as clothing and textiles industries. In the US, retail sales advanced modestly in February as soaring gasoline and food prices compelled households to cut back spending on other goods like furniture, electronics and appliances. Mortgage applications dropped for the week ended 11 March, as refinancing declined amid uncertainty regarding the Fed’s policy decision and Russia-Ukraine war. Meanwhile, the Fed raised its interest rates for the first time since 2018 and set an aggressive plan to push borrowing costs to restrictive levels next year in a pivot from battling the coronavirus pandemic to countering the economic risks posed by excessive inflation and the war in Ukraine.
The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 8.21%. Further, the yield on 2023 bond declined to 5.45%, while that for the longer-dated 2030 issue fell to 9.61%.
At 06:00 SAST, the US dollar is trading 0.1% higher against the South African rand at R14.9276, while the euro is trading marginally higher at R16.474. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R19.6346.
Yesterday, the euro declined against most of the major currencies. Russia announced that it formally left the Council of Europe, the Strasbourg-based human rights watchdog. Russia’s departure from the body potentially pre-empts the country’s expulsion following its invasion of Ukraine.
At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.1036, while it has marginally weakened against the British pound to trade at GBP0.8389.
Economic Updates
On a YoY basis, in South Africa, retail sales rose 7.7% in January, higher than market expectations of an advance of 4.9%. In the prior month, retail sales had climbed by a revised 3.2%.
The final consumer price index (CPI) registered a rise of 5.7% in Italy on a YoY basis, in February. The CPI had risen 4.8% in the prior month. The preliminary figures had also recorded an advance of 5.7%.
In the week ended 11 March 2022, on a weekly basis, the number of mortgage applications in the US slid 1.2%. In the previous week, the number of mortgage applications had recorded a rise of 8.5%.
On a MoM basis, retail sales (ex-auto & gas) in the US recorded a drop of 0.4% in February. In the prior month, retail sales (ex-auto & gas) had recorded a revised rise of 5.2%.
The export price index in the US registered a rise of 16.6% in February on a YoY basis, more than market expectations for a rise of 12.6%. In the prior month, the export price index had registered a revised rise of 15.0%.
The import price index in the US recorded a rise of 10.9% on an annual basis in February, higher than market expectations of an advance of 8.4%. The import price index had risen by a revised 10.7% in the previous month.
Advance retail sales in the US climbed 0.3% in February on a MoM basis. In the prior month, advance retail sales had risen by a revised 4.9%.
Fed hiked its interest rate by 25 basis points to 0.5%, at par with market expectations of 0.5%.
In Canada, the CPI recorded a rise of 5.7% on an annual basis in February, compared with a rise of 5.1% in the prior month. Markets were anticipating the CPI to climb 5.5%.
On a monthly basis, in Canada, wholesale sales registered a rise of 4.2% in January, higher than market expectations of an advance of 3.9%. Wholesale sales had registered a rise of 0.6% in the previous month.
Machinery orders in Japan slid 2.0% on a MoM basis in January, less than market expectations for a drop of 2.2%. In the previous month, machinery orders had climbed 3.6%.
The gross domestic product (GDP) recorded a rise of 3.0% in New Zealand on a QoQ basis in 4Q21, compared with a fall of 3.7% in the previous quarter. Market expectations were for GDP to rise 3.2%.
Corporate Updates
South Africa
Growthpoint Properties (JO:GRTJ) Limited: The real estate investment trust company, in its 1H22 results, announced that its revenue declined 4.8% from the same period of the preceding year to R6.42bn. Its diluted EPS stood at 106.84c, compared with a loss per share of 42.05c recorded in the corresponding period of the previous year.
Rand Merchant Investment Holdings Ltd (JO:RMIJ): The financial services investment company, in its 1H22 results, indicated that its revenue rose to R11.60bn from R10.14bn posted in the corresponding period of the previous year. Its diluted EPS decreased 44.3% from the same period of the prior year to 36.50c.
Datatec (JO:DTCJ) Limited: The information technology company, in its FY22 trading statement, reported that the Group achieved a very strong operational performance during FY22 as it continued to benefit from technology demand for networking, security and cloud infrastructure with an increased software and services mix. Group revenue for FY22 is expected to be approximately $4.65bn (FY21: $4.11bn), representing a year over year increase of 13.0%.
Global stocks recover some ground on Ukraine talks: World stocks recovered ground as markets watched for signs of light in the Ukraine conflict, while Treasury yields reached their highest since mid-2019 in anticipation of the first US interest rate hike in three years.
