JPMorgan shares drop as bank warns of fragile consumers, higher costs
South Africa Market Review
South African markets closed in the green yesterday. Meanwhile, the US Federal Reserve (Fed) Chairman, Jerome Powell stated that the central bank was prepared to raise interest rates more than 25 basis point at its next meeting to combat inflation. Real estate firms, Delta Property Fund (JO:DLTJ), Dipula Income Fund (JO:DIBJ) and Fortress REIT (JO:FFAJ) surged 11.5%, 5.3% and 4.9%, respectively. Diversified miners, Anglo American (JO:AMSJ) and Kumba Iron Ore (JO:KIOJ) soared 7.6% and 1.1%, respectively. Bankers, FirstRand (JO:FSRJ), Nedbank Group (JO:NEDJ) and Absa Group (JO:ABGJ) gained 2.8%, 2.7% and 2.1%, respectively. On the flipside, gold miners, Harmony Gold Mining Company (JO:HARJ), AngloGold Ashanti (JO:ANGJ) and Gold Fields (JO:GFIJ) shed 4.3%, 4.0% and 3.2%, respectively. The JSE All Share index advanced 1.2% to close at 75,751.41.
UK Market Review
The UK market finished firmer yesterday, buoyed by broad based gains in insurance and banking sector stocks and as investors react to the US Fed Chairman, Powell’s hawkish comments. Insurance companies, Prudential (LON:PRU), Aviva (LON:AV) and Legal & General Group (LON:LGEN) advanced 4.1%, 3.4% and 2.6%, respectively. Banks, Lloyds Banking Group (LON:LLOY), HSBC Holdings (LON:HSBA) and NatWest Group (LON:NWG) gained 3.3%, 3.2% and 3.1%, respectively. On the contrary, retailer, Kingfisher (LON:KGF) plunged 6.3%, after it warned of a decline in its 1Q22 sales, despite reporting higher FY21 profits. Auto Trader Group (LON:AUTOA) shed 4.4%, after it announced the acquisition of Autorama for a consideration of GBP200.00mn. Miners, Fresnillo (LON:FRES) and Rio Tinto (LON:RIO) declined 3.9% and 1.6%, respectively. The FTSE 100 index advanced 0.5% to close at 7,476.72.
US Market Review
US markets ended higher yesterday, after the Fed indicated that a higher increase in interest rates is in order to combat high inflation. Nike (NYSE:NKE) advanced 2.2%, after the footwear company reported stronger-than-expected 3Q22 earnings and sales. Financial firms, JPMorgan Chase & Company (NYSE:JPM), Goldman Sachs Group (NYSE:GS) and Visa (NYSE:V) gained 2.1%, 1.2% and 0.7%, respectively. Technology companies, Intel (NASDAQ:INTC), Apple (NASDAQ:AAPL) and salesforce.com (NYSE:CRM) added 2.1%, each. On the other hand, pharmaceutical companies, Statera Biopharma (NASDAQ:STAB) and Oric Pharmaceuticals (NASDAQ:ORIC) plummeted 43.4% and 28.7%, respectively. The S&P 500 index rose 1.1% to settle at 4,511.61, while the DJIA index advanced 0.7% to close at 34,807.46. The NASDAQ index climbed 2.0% to end the trading session at 14,108.82.
Asia Market Review
Asian markets are trading higher this morning, tracking overnight gains on Wall Street. In Japan, financial firm, SoftBank Group (T:9984) has soared 8.3%. On the flipside, transport company, Kawasaki Kisen Kaisha (T:9107) has shed 3.5%. In Hong Kong, pharmaceutical company, Wuxi Biologics (HK:2269) has surged 9.8%. On the contrary, CITIC has declined 2.7%. In South Korea, BooKook Steel Company (KS:026940) has jumped 28.4%. Meanwhile, SsangYong Motor Company (KS:003620) has plummeted 19.2%. The Nikkei 225 index is trading 2.7% higher at 27,965.03. The Hang Seng index has added 1.7% to trade at 22,261.16, while the Kospi index is trading 0.5% higher at 2,724.13.
Key Global Indices
Commodities
At 06:00 SAST today, Brent spot prices rose 2.1% to trade at $117.61/bl, reversing previous session’s losses.
Yesterday, Brent spot prices fell 2.9% to settle at $115.16/bl, after the European Union (EU) nations seemed to not agree to join the US in a Russian oil ban in retaliation for its invasion of Ukraine. The American Petroleum Institute (API) reported that crude oil inventories declined by 4.30mn bls for the week ended 18 March.
Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.4% to $7.27/bushel.
At 06:00 SAST today, gold prices marginally advanced to trade at $1,922.34/oz. Yesterday, gold declined 0.7% to close at $1,921.69/oz, after hawkish comments from the US Fed boosted US Treasury yields, thus denting demand for the safe haven yellow metal.
Yesterday, copper declined 0.2% to close at $10,259.50/mt. Aluminium closed 0.4% lower at $3,493.50/mt.
Currencies
Yesterday, the South African rand strengthened against the US dollar. In South Africa, business activity advanced in January, recovering from a decline in December, with an increase in four of the 10 components outweighing decreases in the remaining six. In the US, manufacturing activity in the central Atlantic region rebounded in March after growing marginally in February. Meanwhile, Cleveland Fed President, Loretta Mester, stated that the Fed should raise its benchmark policy rate to about 2.5% this year and follow up with more increases next year to combat inflation.
The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 8.50%. Further, the yield on 2023 bond advanced to 5.51%, while that for the longer-dated 2030 issue rose to 9.77%.
At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R14.8002, while the euro is trading 0.1% lower at R16.3199. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R19.6596.
Yesterday, the euro declined against most of the major currencies. In the eurozone, the European Central Bank (ECB) Vice President, Luis de Guindos said that Russia’s war in Ukraine will dent the eurozone’s growth, but it is still set to expand, even if the conflict escalates.
At 06:00 SAST, the euro marginally slipped against the US dollar to trade at $1.1027, while it has weakened 0.2% against the British pound to trade at GBP0.83.
Economic Updates
In January, leading indicator in South Africa advanced to 127.30. In the previous month, leading indicator had recorded a revised reading of 126.00.
In the UK, in February, public sector net borrowing / public sector debt has posted a deficit of GBP12.35bn, following a surplus of -GBP3.65bn in the previous month. Markets were anticipating public sector net borrowing / public sector debt to post a deficit of GBP7.86bn.
The current account surplus in the eurozone expanded to EUR23.00bn in January, more than market expectations of a seasonally adjusted current account surplus of EUR20.10bn. The eurozone had registered a current account surplus of EUR22.60bn in the prior month.
On a monthly basis, the seasonally adjusted construction output in the eurozone advanced 3.94% in January. Construction output had fallen by a revised 1.5% in the previous month.
In March, the Richmond Fed manufacturing index in the US climbed to 13.00, more than market expectations for a rise to 4.00. In the previous month, the Richmond Fed manufacturing index had recorded a reading of 1.00.
In Canada, the industrial product price index advanced 3.1% on a monthly basis in February, more than market expectations for a rise of 1.2%. The industrial product price index had recorded a rise of 3.0% in the prior month.
Corporate Updates
South Africa
Attacq Limited (JO:ATTJ): The real estate company, in its 1H22 results, indicated that its revenue rose to R1.39bn from R1.21bn posted in the corresponding period of the previous year. Its diluted EPS increased from the same period of the prior year to 98.40c.
Merafe Resources Limited (JO:MRFJ): The mining company, in its FY21 results, reported that its revenue advanced 68.7% from the preceding year to R8.06bn. Its diluted EPS stood at 66.80c, compared with a loss per share of 40.00c recorded in the previous year.
Brimstone Investment Corporation Limited (JO:BRTJ): The financial company, in its FY21 trading statement, stated that it expects its basic EPS to be between 290.60c and 294.00c as compared with a loss per share of 73.00c reported in the previous year.
Sirius (JO:SREJ) to convert its UK business to a REIT: Sirius Real Estate, the JSE-listed German flexible office specialist landlord, said it would convert its UK business to a real estate investment trust (REIT). By entering the UK REIT regime, the property company will no longer be subject to UK corporation tax on income or gains from its property rental business and will be required to pay 90% or more of its UK property rental business income to shareholders annually as property income distributions.