Gains In Retail and Mining Sector Stocks

SOUTH AFRICA MARKET REVIEW

• South African markets closed in the green yesterday, buoyed by broad based gains in retail and mining sector stocks.
• Retailers, Cashbuild (JO:CSBJ), Cie Financiere Richemont (JO:CFRJ) S.A. and Clicks (JO:CLSJ) Group jumped 7.2%, 5.1% and 2.0%, respectively.
• Miners, African Rainbow Minerals (JO:ARIJ), Pan African Resources and Anglo American (JO:AMSJ) soared 5.6%, 4.6% and 4.5%, respectively.
• Financial services companies, Alexander Forbes Group Holdings (JO:AFHJ), PSG Group (JO:PSGJ) and Coronation Fund Managers advanced 2.6%, 1.5% and 0.7%, respectively.
• On the flipside, banking firms, Capitec Bank Holdings (JO:CPIJ), RMB Holdings (JO:RMHJ) and Standard Bank Group (JO:SBKJ) shed 4.0%, 1.2% and 0.8%, respectively.
• Insurance companies, Old Mutual (LON:OMU), Clientele and Sanlam (JO:SLMJ) declined 2.9%, 2.3% and 1.0%, respectively.
• The JSE All Share index advanced 1.6% to close at 76,176.15.

UK MARKET REVIEW

• The UK market finished firmer yesterday, despite domestic inflation rising to its highest level in three decades in December, as investors focus on strong corporate earnings and updates.
• Burberry Group (LON:BRBY) soared 6.3%, after the retailer reported an increase in its 3Q22 revenues, which were buoyed by an acceleration in full price sales.
• Pearson advanced 4.4%, after the company raised its FY21 earnings outlook, driven by its assessment and qualification business.
• Mining company, Antofagasta (LON:ANTO) gained 3.0%, after it announced a robust FY21 production update.
• On the contrary, travel and leisure companies, International Consolidated Airlines Group (LON:ICAG) S.A., Whitbread (LON:WTB) and InterContinental Hotels Group (LON:IHG) shed 3.4%, 0.9% and 0.7%, respectively.
• The FTSE 100 index advanced 0.3% to close at 7,589.66.

US MARKET REVIEW

• US markets ended lower yesterday, as investors express concerns about rising US Treasury yields and soaring inflation.
• ASML Holding (AS:ASML) NV ADR shed 2.3%, despite the company reporting robust 4Q21 earnings and anticipating a significant rise in its FY22 sales, along with a doubling of its dividend.
• Meanwhile, Procter & Gamble gained 3.4%, after the company reported better than expected 2Q22 results.
• Morgan Stanley (NYSE:MS) added 1.8%, after the company reported robust 4Q21 profits, buoyed by strong performances in its investment banking and wealth management divisions.
• The S&P 500 index fell 1.0% to settle at 4,532.76, while the DJIA index declined 1.0% to close at 35,028.65.
• The NASDAQ index eased 1.1% to end the trading session at 14,340.25.

ASIA MARKET REVIEW

• Asian markets are trading higher this morning, despite overnight losses on Wall Street.
• The People’s Bank of China reduced the one-year loan prime rate by 10 basis points from 3.8% to 3.7%.
• In Japan, Sony Group (NYSE:SONY) has advanced 3.8%.
• On the other hand, transport company, Kawasaki Kisen Kaisha (T:9107) has plummeted 9.5%.
• In Hong Kong, delivery company, Meituan (HK:3690) has surged 6.8%.
• On the flipside, pharmaceutical company, Sino Biopharmaceutical Ltd (HK:1177) has eased 1.3%.
• In South Korea, Il Dong Pharmaceutical Co Ltd (KS:249420) has shed 4.6%.
• Meanwhile, Seah Steel Corp (KS:003030) has jumped 8.2%.
• The Nikkei 225 index is trading 0.8% higher at 27,691.18.
• The Hang Seng index has advanced 2.3% to trade at 24,681.50, while the Kospi index is trading 0.6% higher at 2,857.62.

COMMODITIES

• At 06:00 SAST today, Brent spot prices rose 0.7% to trade at $88.21/bl, reversing the previous session’s losses.
• Yesterday, Brent spot prices fell 0.8% to settle at $87.62/bl, after a fire on a pipeline from Iraq to Turkey briefly stopped flows, increasing concerns about an already tight short-term supply outlook. However, flows resumed through the Kirkuk-Ceyhan pipeline that carries crude oil from northern Iraq to the Turkish port of Ceyhan for export. Meanwhile, the American Petroleum Institute (API) reported that crude oil inventories rose by 1.40mn bls for the week ended 14 January.
• Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 1.4% to $5.96/bushel.
• At 06:00 SAST today, gold prices marginally declined to trade at $1,839.66/oz. Yesterday, gold gained 1.5% to close at $1,840.54/oz, as a weaker greenback gave a boost to the safe haven yellow metal.
• Yesterday, copper rose 1.8% to close at $9,864.00/mt. Aluminium closed 1.0% higher at $3,058.00/mt.

CURRENCIES

• Yesterday, the South African rand strengthened against the US dollar. In South Africa, inflation rose more than expected in December, buoyed by rising fuel, electricity and food costs, raising concerns that a further rise in these costs would force the central bank and the SA government to remove the impetus that’s helped cope with the damage caused by the COVID-19 pandemic. Retail sales soared more than expected in November, driven by Black Friday sales. In the US, homebuilding rose to a nine-month high in December, following a surge in multi-family housing projects, despite soaring prices for materials after the US government doubled duties on imported Canadian softwood lumber that would hamper activity later this year. Building permits accelerated in December, as demand for single family homes increased.
• The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.79%. Further, the yield on 2023 bond advanced to 5.18%, while that for the longer-dated 2030 issue fell to 9.37%.
• At 06:00 SAST, the US dollar is trading 0.2% lower against the South African rand at R15.3071, while the euro is trading 0.1% lower at R17.3771. At 06:00 SAST, the British pound has marginally declined against the South African rand to trade at R20.8602.
• Yesterday, the euro declined against most of the major currencies. In Germany, the consumer price index (CPI) advanced in line with expectations in December. In the UK, inflation surged to a three-decade high in December, putting pressure on the standard of living and likely forcing the Bank of England (BoE) to raise interest rates.
• At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1352, while it has marginally weakened against the British pound to trade at GBP0.833.

ECONOMIC UPDATES

• In South Africa, the CPI advanced 0.6% on a monthly basis in December, more than market expectations for a rise of 0.4%. The CPI had recorded a rise of 0.5% in the previous month.
• On a monthly basis, retail sales climbed 1.9% in November, in South Africa. In the previous month, retail sales had recorded a drop of 1.3%.
• In December, the CPI registered a rise of 0.5% in the UK on a monthly basis, compared with a rise of 0.7% in the prior month. Market anticipations were for the CPI to climb 0.3%.
• In the UK, the non-seasonally adjusted input producer price index eased 0.2% on a MoM basis in December, compared with market expectations of an advance of 0.7%. Input producer price index had advanced 1.0% in the previous month.
• The non-seasonally adjusted output producer price index climbed 0.3% in the UK on a MoM basis in December, compared with an advance of 0.9% in the previous month. Market expectations were for output producer price index to rise 0.6%.
• In the UK, the retail price index advanced 1.1% in December on a monthly basis, higher than market expectations of an advance of 0.7%. The retail price index had climbed 0.7% in the prior month.
• The final CPI in Germany rose 0.5% in December on a monthly basis, meeting market expectations of a rise of 0.5%. The preliminary figures had also recorded an advance of 0.5%. The CPI had dropped 0.2% in the previous month.
• Current account surplus in the eurozone rose to EUR23.60bn in November. The eurozone had registered a seasonally adjusted current account surplus of EUR18.10bn in the previous month.
• On a monthly basis, the seasonally adjusted construction output registered a drop of 0.18% in November, in the eurozone. In the previous month, construction output had risen by a revised 0.64%.
• Current account surplus in Italy dropped to EUR4,682.00bn in November, following a current account surplus of EUR5,513.00bn in the prior month.
• In the US, the number of mortgage applications recorded a rise of 2.3% on a weekly basis, in the week ended 14 January 2022. The number of mortgage applications had advanced 1.4% in the previous week.
• Building permits climbed 9.1% in the US on a MoM basis, in December. In the prior month, building permits had recorded a rise of 3.6%.
• In December, on a MoM basis, housing starts recorded a rise of 1.4% in the US. Housing starts had recorded a revised rise of 8.1% in the prior month.
• In December, the CPI dropped 0.1% in Canada on a monthly basis, meeting market expectations of a fall of 0.1%. In the previous month, the CPI had climbed 0.2%.
• In Canada, the house price index rose 0.8% on a monthly basis, in December. In the prior month, the house price index had advanced 0.4%.

CORPORATE UPDATES

SOUTH AFRICA

• Compagnie Financiere Richemont SA (JO:CFROJ).: The retail company announced further sales growth acceleration in the 3Q22 period ended 31 December 2021, with sales up by 32.0% at constant exchange rates and by 35.0% at actual exchange rates. Double-digit sales growth was recorded across all regions, channels and business areas. The company reported strongest performance from the Americas and Europe, thus rebalancing regional sales mix.
• Pan African Resources Plc (JO:PANJ): The mining company, in its 1H22 operational update, reported that group gold production increased by 9.9% to a record half-year production of 108,085oz. ESG projects, including the 10MW renewable energy solar photovoltaic (PV) plant at Evander Mines and large-scale agriculture projects at Barberton Mines are on track for commissioning before the 30 June 2022 financial year-end. Group net senior debt decreased by 60.1% to $23.90mn after payment of a record net dividend of $21.60mn in December 2021. Pan African is increasing its full year production guidance to approximately 200,000oz.
• BHP says Omicron’s effects will persist into late financial 2022: Mining giant BHP joined rival Rio Tinto (LON:RIO) in warning of further disruptions from Covid-19, including labour shortages, and said the effects of the Omicron variant would last into the second half of its financial year.