Market Review: China’s Retail Sales, Twitter Shares Plunged, Rand Weakened

  • Market Overview

South Africa Market Review

South African markets closed in the green on Friday, buoyed by broad based gains in mining sector stocks. Platinum mining companies, Northam Platinum (JO: NHMJ ), Impala Platinum Holdings (JO: IMPJ ) and Anglo American Platinum (JO: AMSJ ) soared 12.8%, 10.4% and 9.5%, respectively. Gold mining companies, Gold Fields (JO: GFIJ ), AngloGold Ashanti (JO: ANGJ ) and Harmony Gold Mining (JO: HARJ ) gained 4.4%, 4.2% and 3.6%, respectively. Real estate companies, Dipula Income Fund (JO: DIBJ ), Capital & Counties Properties (JO: CCOJ ) and Attacq (JO: ATTJ ) surged 5.5%, 1.9% and 1.4%, respectively. Retailers, Mr Price Group (JO: MRPJ ), Lewis Group (JO: LEWJ ) and Cie Financiere Richemont S.A. (JO: CFRJ ) gained 4.1%, 3.3% and 2.1%, respectively. Financial firms, Capitec Bank Holdings (JO: CPIJ ), Absa Group (JO: ABGJ ) and Investec (JO: INLJ ) added 1.6%, 1.5% and 1.4%, respectively. The JSE All Share index advanced 2.1% to close at 68,650.66.

UK Market Review

The UK market finished firmer on Friday, boosted by broad based gains in the financial services sector. Scottish Mortgage Investment Trust (LON: SMT ), Hargreaves Lansdown (LON: HRGV ) and Schroders (LON: SDR ) surged 7.3%, 2.7% and 1.6%, respectively. Travel and leisure companies, Whitbread (LON: WTB ) and InterContinental Hotels Group (LON: IHG ) soared 3.3% and 1.6%, respectively. Sage Group (LON: SGE ) advanced 3.9%, after the company reported steady 1H22 profits and revenues, even as organic growth in all regions was offset by disposals and currency headwinds. Real estate companies, Berkeley Group Holdings (LON: BKGH ), Taylor Wimpey (LON: TW ) and Persimmon (LON: PSN ) added 1.8%, 1.4% and 0.7%, respectively. The FTSE 100 index advanced 2.6% to close at 7,418.15.

US Market Review

US markets ended higher on Friday, as investors assessed the US Federal Reserve’s decision to get inflation under control. Robinhood Markets (NASDAQ: HOOD ) soared 24.9%, after a filing revealed that Sam Bankman-Fried, the Chief Executive Officer of cryptocurrency exchange, FTX Trading, had taken a 7.6% stake in the popular trading platform. Meanwhile, Twitter (NYSE: TWTR ) plunged 9.7%, after Elon Musk tweeted that the deal to buy the social media company was on hold as it is “pending details supporting calculation that spam/fake accounts do indeed represent less than 5.0% of users”. He also added that he is still committed to the acquisition. The S&P 500 index rose 2.4% to settle at 4,023.89, while the DJIA index advanced 1.5% to close at 32,196.66. The NASDAQ index climbed 3.8% to end the trading session at 11,805.00.

Asia Market Review

Asian markets are trading mostly lower this morning, as a decline in China’s retail sales for April dampened investor sentiment. In Japan, chemicals company, Nissan Chemical Corporation (TYO: 4021 ) has surged 4.5%. On the flipside, Sumitomo Chemical Company (TYO: 4005 ) has plunged 8.9%. In Hong Kong, delivery company, Meituan (HK: 3690 ) has shed 3.6%. On the contrary, Wuxi Biologics (HK: 2269 ) has added 2.1%. In South Korea, automotive company, SsangYong Motor Company (KS: 003620 ) has plunged 19.2%. On the other hand, Daehan Flour Mills Company (KS: 001130 ) has advanced 14.4%. The Nikkei 225 index is trading 0.5% higher at 26,547.74. The Hang Seng index has declined 0.4% to trade at 19,813.58, while the Kospi index is trading 0.3% lower at 2,598.43.

Commodities

At 06:00 SAST today, Brent spot prices fell 1.6% to trade at $110.19/bl. Meanwhile, the European Union (EU) still aims to agree on a phased embargo on Russia oil this month despite concerns about supply in eastern Europe.

On Friday, Brent spot prices rose 3.3% to settle at $111.97/bl, following an ease in China’s COVID-19 restrictions and amid increasing worries about supply bottlenecks if the EU bans Russian oil. US oil rigs rose by 6 to 563 this week, their highest level since March 2020, while gas rigs gained by 3 to 149, their highest since September 2019.

On Friday, the Illinois North Central No.2 Yellow corn spot prices fell 1.3% to $7.72/bushel.

At 06:00 SAST today, gold prices marginally advanced to trade at $1,812.22/oz. On Friday, gold declined 0.6% to close at $1,811.79/oz, as a stronger greenback dented demand for the safe haven yellow metal.

On Friday, copper rose 0.9% to close at $9,184.60/mt. Aluminium closed 1.8% higher at $2,760.50/mt.

Currencies

On Friday, the South African rand weakened against the US dollar. In the US, consumer sentiment slumped to its lowest level in nearly 11 years in early May, amid inflation worries. However, household spending remains underpinned by a strong labour market and massive savings, which should keep the economy expanding.

The yield on benchmark government bonds were mixed on Friday. The yield on 2026 bond fell to 8.32%. Further, the yield for the longer-dated 2030 issue rose to 9.98%.

At 06:00 SAST, the US dollar is trading 0.6% higher against the South African rand at R16.2568, while the euro is trading 0.5% higher at R16.9087. At 06:00 SAST, the British pound has gained 0.5% against the South African rand to trade at R19.9126.

On Friday, the euro advanced against most of the major currencies. In the eurozone, industrial production dropped lower than expected in March.

At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.0401, while it has marginally gained against the British pound to trade at GBP0.8491.

Economic Updates

The final consumer price index ( CPI ) recorded a drop of 0.2% on a monthly basis in April, in Spain, higher than market expectations of a drop of 0.1%. In the previous month, the CPI had risen 3.0%. The preliminary figures had indicated a drop of 0.1%.

The final CPI (ex-tobacco) recorded a rise of 0.4% on a MoM basis in April, in France, at par with market expectations of an advance of 0.4%. The preliminary figures had also recorded a rise of 0.4%. In the previous month, the CPI (ex-tobacco) had climbed 1.4%.

The seasonally adjusted industrial production dropped 1.8% in the eurozone on a MoM basis in March, compared to a revised advance of 0.5% in the prior month. Markets were anticipating industrial production to ease 2.0%.

The flash Reuters/Michigan consumer sentiment index in the US eased to 59.10 in May, more than market expectations for a drop to 64.00. In the prior month, the Reuters/Michigan consumer sentiment index had recorded a level of 65.20.

The import price index registered a rise of 12.0% in the US on a YoY basis in April, compared to a revised advance of 13.0% in the previous month. Markets were anticipating the import price index to climb 12.7%.

In the US, the export price index climbed 18.0% on an annual basis in April, lower than market expectations of an advance of 21.4%. The export price index had climbed by a revised 18.6% in the previous month.

Corporate Updates

South Africa

MTN Group (JO: MTNJ ): The telecommunications company, in its quarterly trading update for the period ended 31 March 2022, stated that group service increased by 15.9%, as compared with that in the corresponding period of the previous year. Group EBITDA advanced by 21.1%. MTN South Africa service revenue up by 4.6%, with an EBITDA margin of 39.9%. In the quarter, the Group grew subscriber numbers by 3.2% YoY to 276.20mn, which was impacted by new SIM registration regulations in Nigeria. Group leverage of 0.3x, was down from 0.4x as at 31 December 2021, comfortably within covenant limits. In a major transformation milestone, MTN Group has for the first time achieved Level 1 Broad-Based Black Economic Empowerment (B-BBEE) Contributor Status. This is up from Level 2 in 2020. The rating, dated 10 May 2022, was for the financial year ended 31 December 2021. MTN SA maintained its Level 1 Contributor Status, for the third year running.

Adcorp Holdings Limited (JO: ADRJ ): The workforce solutions company, in its FY21 trading statement, revealed that it expects its EPS to increase by at least 55.90c as compared with 35.60c reported in the previous year. It expects its HEPS to increase by at least 47.50c as compared with 34.20c posted in the same period of the preceding year.

‘We’ll redouble efforts to resolve the energy crisis,’ says Finance Minister: With ongoing challenges faced by power utility Eskom, stabilising the supply of electricity tops Operation Vulindlela’s five structural reform initiatives.

KZN floods were twice as likely to happen, due to climate change, study shows: Global warming made the heavy rains behind SA’s devastating floods in April twice as likely as they would have been if greenhouse gas emissions had never heated the planet, scientists said.

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