11 JANUARY 2022
SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red yesterday, as prospects of higher interest rates in 2022 led to cautious investor sentiment.
- Financial sector stock, Alexander Forbes Group Holdings (JO:AFHJ) dropped 3.4%. The company announced that it has appointed Ann Leepile as the Chief Executive Officer of its investment arm with effect from February.
- Retail sector companies, Cie Financiere Richemont SA (JO:CFRJ) and Woolworths (ASX:WOW) Holdings declined 3.2% and 2.3%, respectively.
- Moreover, market heavyweight, Naspers (JO:NPNJn) eased 0.6%.
- On the other hand, real estate property sector companies, Liberty Two Degrees (JO:L2DJ) and v (JO:AHAJ) climbed 4.0% and 2.7%, respectively.
- Tobacco company, British American Tobacco (JO:SNHJ) advanced 3.3%. The JSE ALL Share Index declined 0.1% to close at 73,830.47.
- The UK market finished weaker yesterday, pulled down by losses in homebuilding sector stocks and as the release of weaker domestic economic data dampened investor sentiment.
- Persimmon (LON:PSN), Barratt Developments (LON:BDEV) and Berkeley Group (LON:BKGH) Holdings plunged 5.2%, 4.9% and 3.6%, respectively, following reports that the UK government would seek an extra GBP4.00bn from property developers to fund cladding repairs on low-rise flats.
- Greggs (LON:GRG) dropped 5.8%, amid news that the bakery chain was hiking the price of its famous sausage rolls.
- On the flipside, Plus500 (LON:PLUSP) rose 3.1%, after the company announced that it had delivered an "outstanding" operational and financial performance throughout 2021. The FTSE 100 index declined 0.5% to close at 7,445.25.
US MARKET REVIEW
- US markets ended mostly lower yesterday, amid expectations that the US Federal Reserve (Fed) could raise interest rates as soon as March 2022 and as US Treasury yields climbed to a 2-year high.
- Take-Two (NASDAQ:TTWO) Interactive Software plummeted 13.1%, following reports that the company is buying Zynga for $12.70bn.
- Lululemon Athletica (NASDAQ:LULU) shed 1.9%, as the company expects lower-than-anticipated 4Q21 sales.
- Royal Caribbean Cruises (NYSE:RCL) declined 1.3%, after the cruise liner stated that it would cancel several of its upcoming cruises due to the Omicron variant.
- The S&P 500 index fell 0.1% to settle at 4,670.29, while the DJIA index declined 0.4% to close at 36,068.87.
- The NASDAQ index marginally climbed to end the trading session at 14,942.83.
ASIA MARKET REVIEW
- Asian markets are trading mostly higher this morning, despite overnight losses on Wall Street.
- In Japan, automaker, Toyota Motor (T:7203) has declined 0.3%.
- Market heavyweight, SoftBank Group (T:9984) has dropped 2.5%.
- In Hong Kong, Shimao Group has advanced 2.3%, after reports indicated that the company is selling all its real estate projects, both residential and commercial.
- China Life Insurance (HK:2628) has gained 0.9%. Meanwhile, China’s Central Commission for Discipline Inspection has placed the company’s Chair, Wang Bin under investigation.
- In South Korea, technology company, Samsung Electronics (KS:005930) has added 0.4%. Also, Hyundai Motor (KS:005380) has gained 0.5%.
- The Nikkei 225 index is trading 0.6% lower at 28,294.54.
- The Hang Seng index has advanced 0.4% to trade at 23,846.16, while the Kospi index is trading 0.1% higher at 2,928.63.
COMMODITIES
- At 06:00 SAST today, Brent spot prices rose 0.4% to trade at $81.42/bl, reversing the previous session’s losses. Meanwhile, reports indicated that there is a possibility of a significant tightening of the oil market this year.
- Yesterday, Brent spot prices fell 1.0% to settle at $81.11/bl, as supplies returned in Kazakhstan, while production in Libya was also on track to return to normal levels. Meanwhile, the crude oil supply-demand situation remained supportive even though rising COVID-19 cases worldwide continued to present a near-term risk.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 1.2% to $5.84/bushel.
- At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,806.05/oz. Yesterday, gold gained 0.3% to close at $1,801.68/oz. Meanwhile, gains were limited amid rising expectations that higher US inflation will bolster the case for higher interest rates by the US Fed.
- Yesterday, copper declined 1.2% to close at $9,574.00/mt. Aluminium closed 0.5% higher at $2,919.49/mt.
CURRENCIES
- Yesterday, the South African rand weakened against the US dollar. In South Africa, new vehicle sales rose 22.1% in 2021 as compared with 2020. However, it remained below pre-pandemic levels. Exports rose more modestly in the wake of the wave of social unrest in July, the cyberattack on Transnet operations, the three-week strike in the steel and engineering sector, renewed lockdown restrictions, record fuel prices and the first interest increase in three years. In the US, wholesale inventories increased more than expected in November, implying that the restocking of warehouses likely contributed strongly to economic growth last quarter.
- The yield on benchmark government bonds mostly rose yesterday. The yield on 2026 bond rose to 7.93%. Further, the yield on 2023 bond declined to 5.17%, while that for the longer-dated 2030 issue rose to 9.49%.
- At 06:00 SAST, the US dollar is trading marginally higher against the South African rand at R15.6802, while the euro is trading 0.2% higher at R17.7803. At 06:00 SAST, the British pound has gained 0.2% against the South African rand to trade at R21.3073.
- Yesterday, the euro declined against most of the major currencies. In the eurozone, the unemployment rate declined in November, as the recovery of the bloc’s labour market continued despite supply-chain disruptions, rising prices and a surge in coronavirus cases.
- At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1341, while it has marginally gained against the British pound to trade at GBP0.8345.
ECONOMIC UPDATES
- South Africa has indicated that new vehicle sales recorded a drop of 3.5% on a YoY basis in South Africa, in December. New vehicle sales had climbed 6.6% in the previous month.
- Retail sales across all sectors in the UK advanced 0.6% on an annual basis, in December. In the previous month, retail sales across all sectors had registered a rise of 1.8%.
- In Italy, unemployment rate registered a drop to 9.2% in November, lower than market expectations of a drop to 9.3%. In the prior month, unemployment rate had recorded a level of 9.4%.
- The unemployment rate dropped to 7.2% in the eurozone, in November, meeting market expectations of a fall to a level of 7.2%. In the prior month, the unemployment rate had recorded a level of 7.3%.
- The investor confidence index in the eurozone rose to a level of 14.90 in January, compared to a level of 13.50 in the previous month.
- The final wholesale inventories registered a rise of 1.4% in the US on a monthly basis in November, more than market expectations for a rise of 1.2%. The preliminary figures had recorded an advance of 1.2%. The wholesale inventories had climbed by a revised 2.5% in the prior month.
- Australia had registered the seasonally adjusted trade surplus of AUD9,423.00mn in November, from a trade surplus of AUD10,781.00mn in the previous month. Market expectations were for the nation to record a trade surplus of AUD10,600.00mn.
CORPORATE UPDATES
SOUTH AFRICA
- BHP buys stake in Tanzanian nickel deposit: BHP will buy a minority stake in a Tanzanian nickel project as the world’s biggest miner seeks to expand in commodities that will be central to the green-energy transition.