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Market Review: China Pledges More Economic Support, Upbeat US Corporate Earnings

Published 2022/04/29, 09:21
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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, amid pledges of economic support in China and upbeat corporate earnings in the US.
  • Real estate companies, Delta Property Fund (JO:DLTJ), Capital & Counties Properties Plc (JO:CCOJ), and Dipula Income Fund (JO:DIBJ) surged 5.5%, 2.9%, and 1.5%, respectively.
  • Retailers, Lewis Group (JO:LEWJ) and Cie Financiere Richemont (JO:CFRJ) S.A. advanced 4.0% and 2.3%, respectively.
  • Platinum miners, Anglo American (JO:AMSJ) Platinum, Impala Platinum (JO:IMPJ) Holdings, and Royal Bafokeng Platinum (JO:RBPCBe) gained 3.2%, 2.8%, and 1.2%, respectively.
  • Gold miners, Sibanye Stillwater (JO:SSWJ), Gold Fields (JO:GFIJ), and AngloGold Ashanti (JO:ANGJ) advanced 1.8%, 1.6%, and 1.5%, respectively.
  • Bankers, Capitec Bank (JO:CPIJ) Holdings, FirstRand (JO:FSRJ), and Absa (JO:ABGJ) Group added 1.7%, 1.4%, and 1.1%, respectively.
  • The JSE All Share index advanced 1.8% to close at 71,534.57.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, buoyed by robust corporate earnings.
  • Standard Chartered (LON:STAN) skyrocketed 14.2% after the bank reported better than expected 1Q22 profits, boosted by rising global interest rates.
  • Whitbread (LON:WTB) gained 4.3%, after reporting better than expected profits in FY21, as revenues improved.
  • However, it raised its guidance on cost inflation as the economic squeeze continued.
  • Barclays (LON:BARC) advanced 3.1%, even after a delay in its GBP1.00bn share buyback further, as a GBP523.00mn conduct charge caused the bank's 1Q22 profit to fall.
  • Unilever (LON:ULVR) gained 2.7% after it reported higher sales in 1Q22, driven by price increases.
  • The FTSE 100 index advanced 1.1% to close at 7,509.19.

US MARKET REVIEW

  • US markets ended higher yesterday, as robust corporate earnings boosted investor sentiment.
  • Meta Platforms (NASDAQ:FB) surged 17.6% after the company reported a lesser than expected decline in its 1Q22 revenues.
  • Merck & Company gained 4.9% after the company reported robust 1Q22 earnings, buoyed by more than $3.00bn in sales of its COVID-19 antiviral.
  • Southwest Airlines (NYSE:LUV) advanced 2.1%, after the air carrier reported upbeat 1Q22 revenues, amid a “sharp rebound” in March.
  • But it also reported a wider than expected first-quarter loss.
  • The S&P 500 index rose 2.5% to settle at 4,287.50, while the DJIA index advanced 1.8% to close at 33,916.39.
  • The NASDAQ index climbed 3.1% to end the trading session at 12,871.53.

ASIA MARKET REVIEW

  • Asian markets are trading higher this morning, tracking overnight gains on Wall Street.
  • In Japan, markets are closed today on account of a public holiday.
  • In Hong Kong, real estate company, Hang Lung Properties (OTC:HLPPY) has plunged 5.1%.
  • Moreover, an e-commerce company, JD.com has shed 2.7%.
  • On the flipside, resort company, Sands China (HK:1928) has added 1.7%.
  • In South Korea, an electronics company, Samsung Electronics (KS:005930) has gained 3.1%.
  • On the contrary, peer, LG Electronics (KS:066570) has shed 3.3%.
  • Yesterday, the Nikkei 225 index closed 1.8% higher at 26,847.90.
  • Today, the Hang Seng index has advanced 2.0% to trade at 20,686.30, while the Kospi index is trading 0.8% higher at 2,688.61.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices marginally rose to trade at $106.96/bl. Meanwhile, COVID-19 lockdowns in China dampened the outlook for global crude oil demand, despite supply disruption fears as European Union (EU) sanctions curb crude and gas exports from Russia, thus underpinning prices.
  • Yesterday, Brent spot prices rose 2.5% to settle at $106.93/bl, on prospects that Germany will join other EU member states in banning Russian oil, which could further tighten supplies in the already stressed global crude oil market.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.1% to $7.87/bushel.
  • At 06:00 SAST today, gold prices advanced 0.3% to trade at $1,900.54/oz. Yesterday, gold gained 0.4% to close at $1,894.45/oz, as the persistent Russia-Ukraine war boosted demand for the safe-haven yellow metal.
  • Yesterday, copper declined 1.7% to close at $9,696.00/mt. Aluminium closed 2.1% lower at $3,015.50/mt.

CURRENCIES

  • Yesterday, the South African rand weakened against the US dollar. In South Africa, producer inflation surged by the most since at least 2013 in March, raising risks of an increased pace of interest rate hikes as the economy already has a fragile rebound. In the US, the economy unexpectedly contracted in 1Q22, amid a resurgence in COVID-19 cases and a drop in pandemic relief money from the government, despite strong domestic demand. Meanwhile, initial jobless claims dropped by 5,000 to a seasonally adjusted 180,000 in the week ended 23 April. Further, factory activity in the US cooled in April as growth in both demand and production dropped.
  • The yield on benchmark government bonds rose yesterday. The yield on the 2026 bond rose to 8.30%. Further, the yield for the longer-dated 2030 issue rose to 9.99%.
  • At 06:00 SAST, the US dollar is trading 0.3% lower against the South African rand at R15.9778, while the euro is trading 0.2% lower at R16.7997. At 06:00 SAST, the British pound has declined 0.2% against the South African rand to trade at R19.9352.
  • Yesterday, the euro advanced against most of the major currencies. In Germany, consumer inflation rose slightly more than expected in April, amid a rise in energy prices and supply chain bottlenecks.
  • At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.0514, while it has marginally weakened against the British pound to trade at GBP0.8427.

ECONOMIC UPDATES

  • The producer price index (PPI) climbed 2.5% in South Africa on an MoM basis in March, higher than market expectations of a rise of 1.5%. The PPI had registered a rise of 1.1% in the prior month.
  • The flash consumer price index (CPI) in Spain recorded a drop of 0.1% on an MoM basis in April, compared with an advance of 3.0% in the prior month. Markets were expecting the CPI to climb 3.3%.
  • In April, the consumer confidence index recorded a drop to 100.00 in Italy, more than market expectations for a fall to a level of 100.40. The consumer confidence index had registered a level of 100.80 in the prior month.
  • The economic sentiment index in Italy advanced to 105.50 in April. In the prior month, the economic sentiment index had recorded a revised level of 105.30.
  • In April, the business confidence index in Italy eased to 110.00, compared with a revised level of 110.10 in the prior month. Market anticipations were for the business confidence index to fall to 110.00.
  • The flash CPI climbed 0.8% on a monthly basis in Germany, in April, compared with a rise of 2.5% in the prior month. Markets were expecting the CPI to rise 0.6%.
  • The flash annualized gross domestic product (GDP) fell 1.4% in the US on a QoQ basis in 1Q22, compared with market expectations of an advance of 1.1%. In the prior quarter, the annualized GDP had risen 6.9%.
  • In the week ended 23 April 2022, the seasonally adjusted number of initial jobless claims in the US registered a drop to 180.00 K, meeting market expectations of a drop to 180.00 K. In the previous week, the number of initial jobless claims had recorded a revised reading of 185.00 K.
  • In April, the Kansas City Fed manufacturing activity index in the US eased to 25.00. In the prior month, the Kansas City Fed manufacturing activity index had registered a level of 37.00.

CORPORATE UPDATES

SOUTH AFRICA

  • Clicks (JO:CLSJ) Group Limited: The retail company, in its 1H22 results, indicated that its revenue rose to R20.91bn from R19.10bn posted in the corresponding period of the previous year. Its diluted EPS increased 27.0% from the same period of the prior year to 492.80c.
  • Coronation Fund Managers Ltd (JO:CMLJ): The fund management company, in its 1H22 trading statement, reported that it expects its EPS and HEPS to decrease between 51.20c and 76.70c, lower as compared with the 255.80c reported in the corresponding period of the previous year.
  • Dis-Chem flags profit rise as it integrates new acquisitions: Pharmacy group Dis-Chem says it is pleased with the performance of its businesses given general pressure on consumers, with profits up by more than a quarter in its year to end-February.

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