Brazil will respond to Trump tariffs using reciprocity law, President Lula says
South Africa Market Review
South African markets closed in the green yesterday, as investors cheered a less hawkish stance from the US Federal Reserve (Fed). Grindrod soared 9.8%, after African Bank announced that it would buy the logistics group’s Grindrod Bank unit for a consideration of R1.50bn to get into South Africa’s increasingly competitive business banking segment. Platinum miners, Anglo American (JO:AMSJ) Platinum, Impala Platinum (JO:IMPJ) Holdings and Royal Bafokeng Platinum (JO:RBPCBe) surged 7.1%, 6.3% and 2.9%, respectively. Retailers, Cie Financiere Richemont (JO:CFRJ) S.A., Clicks (JO:CLSJ) Group and Cashbuild (JO:CSBJ) advanced 4.6%, 2.2% and 1.9%, respectively. Banks, Absa (JO:ABGJ) Group, Capitec Bank (JO:CPIJ) Holdings and FirstRand (JO:FSRJ) advanced 3.6%, 3.2% and 2.6%, respectively. Gold miners, Harmony Gold Mining, Gold Fields (JO:GFIJ) and AngloGold Ashanti (JO:ANGJ) gained 2.6%, 2.5% and 1.6%, respectively. The JSE All Share index advanced 2.8% to close at 69,483.76.
UK Market Review
The UK market finished firmer yesterday, boosted by robust corporate releases. Meanwhile, Britain government announced a 25.0% windfall tax on oil and gas producers' profits. Intermediate Capital Group surged 7.6%, after the company reported that its total FY22 assets under management were ahead in what it called a "defining" year. On the flipside, United Utilities (LON:UU) plunged 6.6%, after it posted a decline in its FY22 underlying pre-tax profit and vowed not to hike average household bills for 2022-2023, despite persistently rising inflation. BT Group (LON:BT) shed 2.3%, after the telecommunications company emerged that the government would examine French billionaire Patrick Drahi's 18.0% stake in the company amid concerns about national security. The FTSE 100 index advanced 0.6% to close at 7,564.92.
US Market Review
US markets ended higher yesterday, buoyed by broad based gains in technology sector stocks amid robust corporate earnings. Broadcom (NASDAQ:AVGO) Inc. gained 3.6%, after the company stated that it will acquire cloud company VMware Inc. in a $61.00bn deal. Apple (NASDAQ:AAPL) advanced 2.3%, despite a dismal production outlook of its flagship item this year, citing industry challenges. It also added that it would lift the hourly pay for the US workers to $22.00 an hour, in order to compete in a tight labour market. The S&P 500 index rose 2.0% to settle at 4,057.84, while the DJIA index advanced 1.6% to close at 32,637.19. The NASDAQ index climbed 2.7% to end the trading session at 11,740.65.
Asia Market Review
Asian markets are trading higher this morning, tracking overnight gains on Wall Street. In Japan, transport company, Kawasaki Kisen Kaisha (TYO:9107) has advanced 4.1%. On the contrary, Osaka Gas (TYO:9532) has shed 2.8%. In Hong Kong, technology company Alibaba (NYSE:BABA) Group Holdings surged 12.3%, after the company reported robust earnings in FY22. E-commerce company, JD.com has soared 5.1%. In South Korea, electronics company, LG Electronics (KS:066570) has added 1.5%. On the flipside, accounting firm, HLB Global (KS:003580) has plunged 5.1%. The Nikkei 225 index is trading 0.6% higher at 26,767.92. The Hang Seng index has advanced 2.9% to trade at 20,691.17, while the Kospi index is trading 1.0% higher at 2,636.63.
Commodities
At 06:00 SAST today, Brent spot prices fell 0.2% to trade at $117.41/bl, reversing previous session gains.
Yesterday, Brent spot prices rose 2.8% to settle at $117.68/bl, on global supply concerns ahead of the US summer driving season, as the European Union (EU) wrangled with Hungary over plans to ban crude imports from Russia over its invasion of Ukraine.
Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 2.4% to $7.62/bushel.
At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,853.68/oz. Yesterday, gold declined 0.2% to close at $1,850.63/oz, as the US Fed’s aggressive monetary policy tightening plan dented the demand appeal of the safe haven yellow metal.
Yesterday, copper declined 0.2% to close at $9,345.50/mt. Aluminium closed 0.3% lower at $2,839.00/mt.
Currencies
Yesterday, the South African rand strengthened against the US dollar. In South Africa, factory inflation soared to its highest in 13 years in April. In the US, the economy slumped more than expected in 1Q22, however, the slump was capped by increased consumer spending on non-residential fixed investment, and residential fixed investment. Initial jobless claims dropped to a 54-year low for the week ended 20 May, indicating that layoffs remain extremely low and that the economy is still expanding despite more headwinds. Meanwhile, pending home sales dropped in April, amid rising prices and mortgage rates.
The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 8.27%. Further, the yield on the longer-dated 2030 issue rose to 9.76%.
At 06:00 SAST, the US dollar is trading 0.3% lower against the South African rand at R15.6539, while the euro is trading marginally higher at R16.8423. At 06:00 SAST, the British pound has marginally gained against the South African rand to trade at R19.8134.
Yesterday, the euro advanced against most of the major currencies.
At 06:00 SAST, the euro advanced 0.3% against the US dollar to trade at $1.0759, while it has weakened 0.1% against the British pound to trade at GBP0.8501.
Economic Updates
In April, the producer price index (PPI) registered a rise of 1.8% in South Africa on a MoM basis, higher than market expectations of an advance of 1.1%. In the previous month, the PPI had risen 2.5%.
The consumer confidence index in Italy recorded a rise to 102.70 in May, more than market expectations for a rise to 100.50. In the previous month, the consumer confidence index had recorded a level of 100.00.
The economic sentiment index registered a rise to 110.90 in May, in Italy. The economic sentiment index had recorded a revised reading of 108.40 in the prior month.
In May, the business confidence index fell to a level of 109.30 in Italy. In the previous month, the business confidence index had recorded a revised level of 109.90.
In March, on a MoM basis, the seasonally adjusted industrial sales in Italy advanced 2.4%. In the prior month, industrial sales had recorded a revised rise of 2.9%.
On a QoQ basis, the second estimate of annualised gross domestic product (GDP) recorded a rise of 7.1% in 1Q22, in the US, compared with an advance of 6.9% in the prior quarter. The preliminary figures had indicated a fall of 1.4%. Market anticipations were for the annualised gross domestic product to drop 1.3%.
Number of initial jobless claims eased to 210.00 K in week ended 21 May 2022, in the US, compared with a reading of 218.00 K in prior week. Markets were anticipating the seasonally adjusted number of initial jobless claims to drop to 215.00 K.
In 1Q22, on a quarterly basis, the second estimate of personal consumption in the US recorded a rise of 3.1%. In the previous quarter, personal consumption had risen 2.5%. The preliminary figures had recorded an advance of 2.7%.
On a monthly basis, pending home sales in the US recorded a drop of 3.9% in April, more than market expectations for a fall of 2.0%. Pending home sales had registered a revised drop of 1.6% in the prior month.
The Kansas City Fed manufacturing activity index dropped to 23.00 in the US, in May. In the previous month, the Kansas City Fed manufacturing activity index had registered a level of 25.00.
On an annual basis, Tokyo CPI excluding fresh food in Japan recorded a rise of 1.9% in May, less than market expectations for an advance of 2.0%. Tokyo CPI excluding fresh food had registered a rise of 1.9% in the previous month.
On an annual basis, Tokyo CPI excluding food and energy in Japan climbed 0.9% in May. Tokyo CPI excluding food and energy had climbed 0.8% in the prior month.
On a YoY basis, industrial profits (YoY) in China climbed 3.5% in April. Industrial profits (YoY) had climbed 8.5% in the prior month.
Consumer confidence in New Zealand on MoM basis, to a level of -2.5% in May. In the previous month, consumer confidence had registered a reading of 8.3%.
Corporate Updates
South Africa
Mr Price Group (JO:MRPJ) Plc: The retail company, in its FY22 trading statement, stated that it expects its basic EPS to be between 30.0% and 35.0%, higher as compared with R10.24 posted in the corresponding period of the previous year. It expects its HEPS to be 23.0% and 28.0%, as compared with R10.68 posted in the same period of the prior year.
Life Healthcare Group Holdings Limited (JO:LHCJ): The healthcare company, in its 1H22 results, reported that its revenue advanced 4.2% from the same period of the preceding year to R13.54bn. Its diluted EPS stood at 41.50, compared with an EPS of 47.4c recorded in the corresponding period of the previous year.
Hosken Consolidated Investments Limited (JO:HCIJ): The investment holding company, in its FY22 trading statement, stated that it expects its basic EPS to be between 1,581.30c and 1,834.30c as compared with a basic loss per share of 1,265.10c reported in the prior year. It expects its HEPS to be between 1,292.50c and 1,350.00c as compared with 287.70c reported in the previous year.
Tsogo Sun (JO:TSGJ) Hotels Limited: The resort company, in its FY22 results, indicated that its income increased to R2.71bn, compared with R1.14bn posted in the previous year. Its diluted loss per share stood at 10.60c as compared with 72.70c posted in the prior year.
Grindrod Limited (JO:GNDJ): The shipping company announced that it has reached agreement with African Bank Limited to dispose of its 100% of the issued ordinary share capital of Grindrod Financial Holdings and 100% of the preference shares issued by Grindrod Bank for a total cash consideration payable of R1.50bn.
Lewis Group (JO:LEWJ) Limited: The retail company, in its FY22 results, indicated that its revenue rose to R7.26bn from R6.73bn posted in the previous year. Its HEPS increased 37.7% from the prior year to 849.0c.
Nampak Limited (JO:NPKJ): The metal can manufacturing company, in its 1H22 results, revealed that its revenue rose 23.7% from the same period of the preceding year to R8.07bn. Its diluted EPS stood at 34.90c, compared with 17.00c recorded in the corresponding period of the previous year.
Oil rises as EU plans embargo on Russian oil: Oil prices rose, extending a cautious rally on signs of tight supply while the EU wrangles with Hungary over plans to ban imports from Russia, the world’s second-largest crude exporter, after it invaded Ukraine