SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red yesterday, pulled down by broad-based losses in technology sector stocks.
- Moreover, concerns about rising inflation prompted investors to sell growth stocks that have rallied in recent months.
- Prosus (JO:PRXJn) and Naspers (JO:NPNJn) declined 5.3% and 3.9%, respectively.
- Platinum mining companies, Royal Bafokeng Platinum Ltd (JO:RBPCBe), Impala Platinum (JO:IMPJ) and Anglo American (JO:AMSJ) Platinum dropped 4.5%, 4.0% and 3.7%, respectively.
- Moreover, gold mining companies, Gold Fields Ltd (JO:GFIJ) and Harmony Gold Mining declined 1.8% and 0.5%, respectively.
- On the other hand, tobacco company, British American Tobacco (JO:SNHJ) advanced 1.5%.
- The JSE All Share index declined 2.1% to close at 65,921.60.
- The UK market finished firmer yesterday, as optimism around an economic recovery led by plans to ease COVID-19 restrictions in the country bolstered investor sentiment.
- Financial sector stocks, Barclays (LON:BARC) and Lloyds Banking Group (LON:LLOY) advanced 3.2% and 2.1%, respectively.
- Bucking the trend, peer, HSBC Holdings PLC (LON:HSBA) dropped 0.9%, after the company reported a significant decrease in its annual profits.
- Moreover, it also lowered its long-term profitability target.
- Property sector stocks, British Land and Land Securities Group climbed 5.4% and 4.5%, amid the prospect of easing restrictions and the reopening of non-essential stores.
- In contrast, InterContinental Hotels Group PLC (LON:IHG) Hotels dropped 1.6%, after it posted a FY20 loss and scrapped its final dividend.
- The FTSE 100 index climbed 0.2% to close at 6,625.94.
US MARKET REVIEW
- US markets ended mostly higher yesterday, after the Federal Reserve Chairman, Jerome Powell stated that the central bank doesn’t expect to shift its accommodative policy stance until a lasting economic recovery can be achieved, adding that he doesn’t expect a “large or persistent” rise in inflation.
- Macy’s (NYSE:M) advanced 3.9% after the company reported higher-than-expected 4Q20 results.
- On the flipside, Wells Fargo (NYSE:WFC) eased 0.3%, after it announced an agreement to sell Wells Fargo Asset Management to GTCR LLC and Reverence Capital Partners LP for $2.10bn.
- The S&P 500 index rose 0.1% to settle at 3,881.37, while the DJIA index marginally advanced to close at 31,537.35.
- The NASDAQ index eased 0.5% to end the trading session at 13,465.20.
ASIA MARKET REVIEW
- Asian markets are trading lower this morning, following a technology stocks sell-off in the US markets.
- In Japan, airliner, Japan Airlines has surged 5.5%.
- On the other hand, market heavyweight, Softbank Group Corp. (T:9984)has dropped 4.0%.
- In Hong Kong, oil companies, CNOOC Ltd (HK:0883) and China China Oil and Gas Group Ltd (HK:0603) have declined 6.0% and 4.5%, respectively.
- In South Korea, financial companies, Shinhan Financial Group (KS:055550), Hana Financial (KS:086790) and KB Financial Group Inc (NYSE:KB) have climbed 2.4%, 1.9% and 0.8%, respectively.
- The Nikkei 225 index is trading 0.9% lower at 29,897.31.
- The Hang Seng index has dropped 1.9% to trade at 30,049.97, while the Kospi index is trading 0.8% weaker at 3,045.91.
COMMODITIES
- At 06:00 SAST today, Brent spot prices fell 0.1% to trade at $63.98/bl, extending the previous session’s losses.
- Yesterday, Brent spot prices fell 1.0% to settle at $64.07/bl, after industry data indicated that US crude inventories unexpectedly rose last week, even as a deep freeze in the southern states curbed demand from refineries that were forced to shut. The American Petroleum Institute (API) stated that crude oil inventories rose by 1.00mn barrels in the week to 19 February.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.6% to $5.37/bushel.
- At 06:00 SAST today, gold prices advanced 0.1% to trade at $1,807.71/oz. Yesterday, gold declined 0.2% to close at $1,805.73/oz. However, losses were capped on the back of rising US Treasury yields.
- Yesterday, copper rose 1.1% to close at $9,231.50/mt. Aluminium closed 1.0% lower at $2,133.00/mt.
CURRENCIES
- Yesterday, the South African rand strengthened against the US dollar. In South Africa, the unemployment rate jumped to a record high in the fourth quarter of last year, as the domestic economy was further battered by the COVID-19 pandemic. Meanwhile, in the US, consumer confidence rose to a three-month high in February, after the US government stepped up its fiscal stimulus payments to families and domestic coronavirus cases fell sharply. Also, the Federal Reserve Chairman, Jerome Powell, in its congressional testimony, stated that the economic rebound from the COVID-19 pandemic recession had further to go. He reiterated that the central bank planned to keep up its growth-stoking policies, which include rock-bottom interest rates and large-scale bond buying.
- The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.09%. Further, the yield on 2023 bond advanced to 5.10%, while that for the longer-dated 2030 issue fell to 8.82%.
- At 06:00 SAST, the US dollar is trading 0.1% higher against the South African rand at R14.5655, while the euro is trading 0.2% higher at R17.6995. At 06:00 SAST, the British pound has gained 0.4% against the South African rand to trade at R20.6251.
- Yesterday, the euro declined against most of the major currencies. In the eurozone, the consumer price index (CPI) remained steady on an annual basis in January.
- At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.2152, while it has weakened 0.3% against the British pound to trade at GBP0.8583.
ECONOMIC UPDATES
- In December, leading indicator climbed to 115.10 in South Africa. In the previous month, leading indicator had recorded a reading of 114.50.
- The unemployment rate climbed to 32.5% in 4Q20, in South Africa. In the previous quarter, the unemployment rate had recorded a level of 30.8%.
- Compared to a reading of 5.0% in the previous month, the three month moving average ILO unemployment rate rose to a level of 5.1% in December, in the UK. Markets were anticipating the three month moving average ILO unemployment rate to climb to 5.1%.
- Number of unemployment benefits claimants in the UK recorded a drop of 20.00K in January, following a revised decline of 20.40K jobs in the prior month.
- In the UK, the number of people employed dropped by 114.00K in December, more than market anticipations of a decline of 30.00K jobs. UK had recorded a decline of 88.00K jobs in the previous month.
- In the UK, the average earnings including bonus advanced 4.7% in December on a YoY basis, more than market expectations for a rise of 4.1%. In the prior month, the average earnings including bonus had recorded a rise of 3.7%.
- In January, the claimant count rate eased to 7.2% in the UK, compared to a revised level of 7.3% in the prior month.
- The seasonally adjusted industrial sales advanced 1.0% in Italy on an MoM basis, in December. Industrial sales had dropped 2.0% in the prior month.
- The seasonally adjusted industrial orders in Italy climbed 1.7% in December on a monthly basis. Industrial orders had registered a revised drop of 1.4% in the previous month.
- On a MoM basis, the final consumer price index (CPI) recorded a rise of 0.2% in the eurozone, in January, in line with market expectations of a rise of 0.2%. The preliminary figures had also indicated a rise of 0.2%. In the previous month, the CPI had risen 0.3%.
- The seasonally adjusted S&P/Case-Shiller composite index of 20 metropolitan areas rose 1.3% on a monthly basis in the US, in December. In the previous month, the S&P/Case-Shiller composite index of 20 metropolitan areas had risen by a revised 1.5%.
- The housing price index climbed 1.1% on a monthly basis in the US, in December. In the prior month, the housing price index had advanced 1.0%.
- In 4Q20, on a quarterly basis, the house price purchase index in the US recorded a rise of 3.8%. In the previous quarter, the house price purchase index had risen by a revised 3.4%.
- Compared to a revised reading of 88.90 in the previous month, the CB consumer confidence index registered a rise to 91.30 in the US, in February. Markets were anticipating the CB consumer confidence index to climb to a level of 90.00.
- The Richmond Fed manufacturing index remained steady at a level of 14.00 in the US, in February. In the previous month, the Richmond Fed manufacturing index had recorded a similar level of 14.00.
CORPORATE UPDATES
SOUTH AFRICA
- Kumba Iron Ore Limited: The iron ore mining company, in its FY20 results, announced that its revenue stood at R80.10bn compared with R64.29bn posted in the same period of the previous year. Its diluted EPS stood at 70.79c compared with 50.58c recorded in the corresponding period of the prior year.
- Discovery Limited (JO:DSBPp): The insurance company, in its trading statement in respect of the six-month period ended 31 December 2020, announced that basic EPS for the period is expected to decrease in the range of 5.0% to 15.0%, to between 263.80c and 294.80c. Basic HEPS is expected to decrease in the range of 5.0% to 15.0%, to between 296.10c and 264.90c over the prior period.
- Aspen (JO:APNJ) Pharmacare Holdings Limited: The healthcare company, in its trading statement, announced that EPS is expected to be 18.0% to 23.0% higher compared with the same period of the previous year. Further, HEPS is expected to be 8.0% to 13.0% higher compared with the corresponding period of the prior year.
- Harmony Gold Mining Company Limited: The gold mining company, in its 1H21 results, announced that its revenue stood at R21.59bn compared with R15.48bn recorded in the corresponding period of the prior year. Its diluted EPS stood at 943.00c compared with 240.00c posted in the same period of the previous year.
- Motus Holdings Limited: The automobile company, in its 1H21 results, announced that its revenue rose 6.0% compared with the same period of the previous year to R44.34bn. Its diluted EPS stood at 496.00c compared with 466.00c posted in the corresponding period of the preceding year.
- KAP Industrial Holdings: The diversified industrial group, in its 1H21 results, announced that its revenue declined 1.0% from the same period of the preceding year to R12.11bn. Its diluted EPS stood at 21.90c compared with 21.40c recorded in the corresponding period of the previous year.
- Imperial (JO:IPLJ) Logistics: The transport and logistics company, in its 1H21 results, announced that its revenue advanced 15.0% from the same period of the previous year to R26.36bn. Its diluted EPS stood at 120.00c compared with 301.00c posted in the same period of the preceding year.
- Murray & Roberts Holdings Ltd (JO:MURJ): The engineering services company, in its 1H21 trading statement, announced that results for the six months under review to 31 December 2020 were negatively affected by prolonged COVID-19 lockdown restrictions. The decline in earnings is attributed to a prolonged COVID-19 restrictions impact, especially in the Mining platform, a disappointing result by the Power, Industrial & Water platform, as well as a lower fair value adjustment profit from the investment in the Bombela Concession Company.
- Positive vaccine news helps oil price upwards: London — Oil prices rose, underpinned by the likely easing of Covid-19 lockdowns around the world, positive economic forecasts and lower output as US supplies were slow to return after a deep freeze in Texas shut down crude production.