Fed Might Increase Its Interest Rate by Next Year, Other Market Updates

SOUTH AFRICA MARKET REVIEW

• South African markets closed in the red yesterday, amid expectations that the US Federal Reserve (Fed) might increase its interest rate by next year with the existing inflation rate at a four-decade high.
• Retailers, Steinhoff International Holdings (JO: SNHJ ) N.V., Lewis Group (JO: LEWJ ) and Mr Price Group (JO: MRPJ ) plunged 6.5%, 1.7% and 1.1%, respectively.
• Real estate property companies, Arrowhead Properties, Capital & Counties Properties and Attacq (JO: ATTJ ) shed 4.6%, 2.6% and 1.6%, respectively.
• Platinum miners, Anglo American (JO: AMSJ ) Platinum and Impala Platinum (JO: IMPJ ) Holdings shed 2.1% and 1.3%, respectively.
• Gold mining stocks, AngloGold Ashanti (JO: ANGJ ),Harmony Gold Mining Company Ltd (JO: HARJ ) and Gold Fields (JO: GFIJ ) declined 1.6%, 1.0% and 0.7%, respectively.
• The JSE All Share index declined 0.4% to close at 71,429.88.

UK MARKET REVIEW

• The UK market finished weaker yesterday, dragged down by losses in travel and leisure sector stocks.
• International Consolidated Airlines Group (LON: ICAG ) S.A., Whitbread (LON: WTB ) and InterContinental Hotels Group (LON: IHG ) plummeted 5.2%, 3.5% and 3.3%, respectively.
• Defence and aerospace companies, Rolls-Royce (LON: RR ) Holdings and BAE Systems (LON: BAES ) shed 4.8% and 1.0%, respectively.
• Lenders, Lloyds Banking Group (LON: LLOY ), Barclays (LON: BARC ) and HSBC declined 4.3%, 2.4% and 1.7%, respectively.
• Retailers, Just Eat Takeaway.com N.V., and Burberry Group (LON: BRBY ) declined 3.4% and 2.8%, respectively.
• On the flipside, Fresnillo (LON: FRES ) and Antofagasta (LON: ANTO ) gained 2.4% and 1.1%, respectively.
• Pharmaceutical stocks, Hikma Pharmaceuticals (LON: HIK ) and AstraZeneca (LON: AZN ) advanced 1.0% and 0.7%, respectively.
• The FTSE 100 index declined 0.8% to close at 7,213.44.

US MARKET REVIEW

• US markets ended lower yesterday, dragged down on fears over the Omicron variant of Covid-19 and the monetary policy meeting outcome later this week.
• Tesla (NASDAQ: TSLA ) plunged 5.0%. The company’s Chief Executive Officer (CEO), Elon Musk, was named Time Magazine person of the year.
• Pfizer (NYSE: PFE ) advanced 4.6%, after the company agreed to acquire Arena Pharmaceuticals for a consideration of approximately $6.70bn.
• Harley-Davidson gained 4.7%, after the company announced that its LiveWire electric-motorcycle business will go public as they merge with special-purpose acquisition corporation AEA-Bridges Impact Corporation in a deal with a pro forma enterprise value of about $1.77bn.
• The S&P 500 index fell 0.9% to settle at 4,668.97, while the DJIA index declined 0.9% to close at 35,650.95.
• The NASDAQ index eased 1.4% to end the trading session at 15,413.28.

ASIA MARKET REVIEW

• Asian markets are trading lower this morning, tracking overnight losses on Wall Street.
• In Japan, automotive manufacturing company, Mitsubishi Motors (T: 7211 ) has shed 2.4%.
• On the contrary, lender, Shinsei Bank has gained 4.3%.
• In Hong Kong, resort company, Sands China (HK: 1928 ) has plummeted 6.2%, while beer brewer, Budweiser Brewing Co.
• APAC has advanced 2.0%. In South Korea, LG Electronics (KS: 066570 ) has declined 3.7%.
• On the other hand, Reyon Pharmaceutical Company has surged 6.6%.
• The Nikkei 225 index is trading 1.0% lower at 28,341.35.
• The Hang Seng index has declined 1.3% to trade at 23,637.93, while the Kospi index is trading 0.7% lower at 2,981.15.

COMMODITIES

• At 06:00 SAST today, Brent spot prices fell 0.2% to trade at $73.53/bl, tracking previous session losses.
• Yesterday, Brent spot prices fell 1.4% to settle at $73.7/bl, amid increasing fears among investors that the Omicron variant of Coronavirus might dampen the crude oil demand. Meanwhile, OPEC+ indicated that it expects world oil demand to average 99.13mn/bl per day (bpd) in 1Q22, 1.11mn/bl higher from its last month forecast, highlighting that the Omicron coronavirus variant would have a mild and limited impact. In the US, California lawmaker Ro Khanna introduced a bill into the US House of Representatives that prevents investors from securing carbon capture and sequestration tax credits if the carbon is used to boost oil production.
• Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.9% to $5.71/bushel.
• At 06:00 SAST today, gold prices declined 0% to trade at $1,786.03/oz. Yesterday, gold gained 0.2% to close at $1,786.67/oz, as a weaker greenback gave a boost to the safe haven yellow metal.
• Yesterday, copper declined 0.8% to close at $9,435.00/mt. Aluminium closed 2.1% higher at $2,670.20/mt.

CURRENCIES

• Yesterday, the South African rand weakened against the US dollar, as investors expect that the US Fed will announce wrap up to its bond purchases sooner than expected ahead of a meeting this week. In South Africa, President Cyril Ramaphosa tested positive for Covid-19, suggesting the high transmissibility of the Omicron variant. In the US, investors look ahead for the release of producer price inflation for November which is expected to increase in line with the previous month.
• The yield on benchmark government bonds were mixed yesterday. The yield on 2026 bond fell to 7.83%. Further, the yield on 2023 bond advanced to 5.12% while that for the longer-dated 2030 issue stood at 9.47%.
• At 06:00 SAST, the US dollar is trading 0.2% higher against the South African rand at R16.0602, while the euro is trading 0.1% higher at R18.1068. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R21.1875.
• Yesterday, the euro declined against most of the major currencies. In Germany, the wholesale price index increased on an annual basis in November.
• At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1274, while it has gained 0.1% against the British pound to trade at GBP0.8546.

Economic Updates

• In Germany, the wholesale price index recorded a rise of 1.3% on a monthly basis, in November. In the previous month, the wholesale price index had recorded a rise of 1.6%.
• The business conditions index recorded a rise to 12.00 in November, in Australia. In the prior month, the business conditions index had recorded a revised reading of 10.00.
• The business confidence index in Australia fell to a level of 12.00 in November. The business confidence index had recorded a revised level of 20.00 in the previous month.
• Food prices recorded a rise of 0.5% in New Zealand on a MoM basis, in November. In the previous month, food prices had dropped 0.9%.

CORPORATE UPDATES

SOUTH AFRICA

• Shoprite Holdings Ltd (JO: SHPJ ) forms joint venture with Sixty60 delivery partner: Shoprite Checkers has formed a joint-venture with RTT Group, the delivery partner for its Sixty60 grocery delivery service, to foster more innovation and protect the intellectual property of its new sales channel.