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Losses In Retail Sector Stocks, Gold Mining Soared and Other Market Updates

Published 2021/12/20, 08:11
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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red on Friday, dragged down by broad based losses in retail sector stocks.
  • Cie Financiere Richemont S.A. (JO:CFRJ), Pick n Pay Stores Ltd (JO:PIKJ) and Shoprite Holdings (JO:SHPJ) plunged 5.0%, 2.3% and 1.8%, respectively.
  • On the contrary, gold mining sector companies, Harmony Gold Mining Company, AngloGold Ashanti (JO:ANGJ) and Gold Fields (JO:GFIJ) soared 5.3%, 5.1% and 4.9%, respectively.
  • Platinum mining sector companies, Impala Platinum (JO:IMPJ) Holdings, Anglo American (JO:AMSJ) Platinum and Northam Platinum Holdings (JO:NHMJ) gained 3.9%, 3.2% and 2.7%, respectively.
  • Banking companies, FirstRand (JO:FSRJ), Absa Group (JO:ABGJ) and Capitec Bank Holdings (JO:CPIJ) advanced 1.9%, 1.5% and 1.2%, respectively.
  • The JSE All Share index declined 0.4% to close at 71,203.13.

UK MARKET REVIEW

  • The UK market finished firmer on Friday, buoyed by the release of robust retail sales data for November.
  • Retailers, Just Eat Takeaway.com N.V. (LON:JETJ), Associated British Foods (LON:ABF) and Burberry Group (LON:BRBY) advanced 4.9%, 3.7% and 1.7%, respectively.
  • Travel and leisure company, International Consolidated Airlines Group (LON:ICAG) S.A. gained 4.0%, after the company announced that it has dismissed an agreement to buy competitor Air Europa from Spain's Globalia.
  • Peers, Whitbread (LON:WTB) and InterContinental Hotels Group (LON:IHG) gained 2.1% and 1.0%, respectively.
  • On the flipside, HSBC Holdings (LON:HSBA) declined 0.6%, after the Financial Conduct Authority fined the bank GBP64.00mn for failings in its anti-money laundering processes.
  • The FTSE 100 index advanced 0.1% to close at 7,269.92.

US MARKET REVIEW

  • US markets ended lower on Friday, dragged down by broad based losses in financial sector stocks.
  • Goldman Sachs Group (NYSE:GS), JPMorgan Chase (NYSE:JPM) & Company and Visa (NYSE:V) shed 3.9%, 2.3% and 1.2%, respectively.
  • General Motors (NYSE:GM) plunged 5.5%, following the unexpected departure of the company’s executive, Dan Ammann, who was responsible for the handling of the company’s self-driving car division, Cruise Automation.
  • Insurance companies, Travelers (NYSE:TRV), American Express (NYSE:AXP) and United Health Group declined 2.4%, 1.8% and 1.2%, respectively.
  • The S&P 500 index fell 1.0% to settle at 4,620.64, while the DJIA index declined 1.5% to close at 35,365.44.
  • The NASDAQ index eased 0.1% to end the trading session at 15,169.68.

ASIA MARKET REVIEW

  • Asian markets are trading lower this morning, tracking Friday’s losses on Wall Street.
  • In China, the People’s Bank of China (PBoC) announced a decrease in its key lending rate for the first time in more than one-and-a-half years.
  • In Japan, financial sector stock, Shinsei Bank (T:8303) has plummeted 5.9%, while video game company, Nintendo Company (T:7974) has advanced 1.5%.
  • In Hong Kong, glass manufacturing company, Xinyi Glass Holdings (HK:0868) has plunged 5.1%.
  • On the flipside, resort company, Sands China (HK:1928) has gained 1.5%.
  • In South Korea, electronics company, LG Electronics (KS:066570) has shed 2.3%.
  • On the contrary, Sewon E&C Company (KS:091090) has surged 7.3%.
  • The Nikkei 225 index is trading 1.9% lower at 27,992.08.
  • The Hang Seng index has declined 1.3% to trade at 22,884.94, while the Kospi index is trading 1.8% lower at 2,963.36.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices fell 1.4% to trade at $71.11/bl, extending the previous session’s losses.
  • On Friday, Brent spot prices fell 2.7% to settle at $72.09/bl, as soaring Omicron cases raised fears regarding stricter lockdown restrictions globally, which can eventually dampen oil demand prospects. The US Department of Energy revealed that it will sell 18.00mn barrels of oil from the Strategic Petroleum Reserve, with offers from companies to purchase it due on 4 January, as part of a previously announced release planned to cool down soaring fuel prices. Baker Hughes stated that the number of oil drilling rigs in the US rose by 3 to 579 for the week ended 17 December, to its highest level since April 2020.
  • On Friday, the Illinois North Central No.2 Yellow corn spot prices rose 0.3% to $5.79/bushel.
  • At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,801.85/oz. On Friday, gold declined 0.1% to close at $1,798.11/oz, as strength in the greenback dampened demand for the safe haven yellow metal.
  • On Friday, copper declined 0.6% to close at $9,467.50/mt. Aluminium closed 2.0% higher at $2,710.25/mt.

CURRENCIES

  • On Friday, the South African rand strengthened against the US dollar. In the US, the Federal Reserve (Fed) stated that an interest rate increase will likely be necessary “shortly after” the Fed tapers its bond purchases in March 2022, and the central bank will also begin reducing its bond holdings as soon as the summer to attack “alarmingly high” inflation.
  • The yield on benchmark government bonds fell on Friday. The yield on 2026 bond fell to 7.64%. Further, the yield on 2023 bond declined to 5.08%, while that for the longer-dated 2030 issue fell to 9.28%.
  • At 06:00 SAST, the US dollar is trading 0.3% higher against the South African rand at R15.9314, while the euro is trading 0.4% higher at R17.9242. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R21.0702.
  • On Friday, the euro declined against most of the major currencies. In Germany, business climate deteriorated amid persistent supply constraints and COVID-19 pandemic restrictions. Moreover, current assessment and business expectations worsened in December. The producer price index (PPI) advanced in November; however, it was lower than market expectations. In the eurozone, the consumer price index (CPI) rose less than expected in November. In the UK, retail sales accelerated faster than expected in November, buoyed by Black Friday discounts, early Christmas shopping and no lockdown restrictions.
  • At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1247, while it has gained 0.2% against the British pound to trade at GBP0.8504.

ECONOMIC UPDATES

  • In November, on a MoM basis, retail sales recorded a rise of 1.4% in the UK, compared to a rise of 0.8% in the previous month. Markets were anticipating retail sales to climb 0.8%.
  • Trade deficit in Spain widened to EUR3.40bn in October, from a trade deficit of EUR2.40bn in the previous month.
  • The PPI registered a rise of 0.8% in Germany on a MoM basis in November, lower than market expectations of a rise of 1.4%. The PPI had registered a rise of 3.8% in the previous month.
  • In December, the Ifo business climate index in Germany registered a drop to 94.70, more than market expectations for a drop to a level of 95.30. The Ifo business climate index had registered a level of 96.50 in the prior month.
  • In Germany, the Ifo current assessment index registered a drop to 96.90 in December, compared to a level of 99.00 in the prior month. Market expectations were for the Ifo current assessment index to ease to 97.50.
  • In December, the Ifo business expectations index recorded a drop to 92.60 in Germany, higher than market expectations of a fall to a level of 93.50. In the prior month, the Ifo business expectations index had recorded a reading of 94.20.
  • In November, the final CPI recorded a rise of 0.4% in the eurozone on a monthly basis, compared to a rise of 0.8% in the previous month. Markets were anticipating the CPI to rise 0.5%. The preliminary figures had indicated an advance of 0.5%.
  • On a monthly basis, the seasonally adjusted construction output in the eurozone climbed 1.6% in October. In the prior month, construction output had advanced 0.9%.
  • On a MoM basis, the house price index registered a rise of 0.4% in November, in Canada. The house price index had recorded an unchanged reading 0.0% in the prior month.

CORPORATE UPDATES

SOUTH AFRICA

  • Oil heads for flat week: Oil prices dipped, putting the market on track to end the week roughly unchanged, as surging cases of the Omicron coronavirus variant raised fears new curbs may hit fuel demand, while a weaker dollar supported commodity markets broadly.

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