Market Review, Commodities, Currencies & Corporate Update - 07.05.21

Published 2021/05/07, 10:00
Updated 2021/07/16, 11:15

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, buoyed by gains in banking sector and retail sector stocks and as investors weighed up the prospects of economic recovery against the threat of Covid-19 in some countries.
  • Banking companies, Nedbank Group (JO:NEDJ), FirstRand (JO:FSRJ) and Standard Bank (JO:SBKJ) Group gained 2.6%, 2.4% and 2.0%, respectively.
  • Retailers, Foschini Group, Truworths International and Massmart Holdings Ltd (JO:MSMJ) rose 3.8%, 2.2% and 1.6%, respectively.
  • On the other hand, platinum miners, Anglo American (JO:AMSJ) Platinum, Northam (JO:NHMJ) Platinum and Impala Platinum (JO:IMPJ) Holdings dropped 4.7%, 4.1% and 0.4%, respectively.
  • The JSE All Share index advanced 0.4% to close at 67,608.89.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, as the Bank of England (BoE) eased its pace of bond-buying and raised the forecast for the country’s economic growth.
  • Barratt Developments (LON:BDEV) advanced 1.9%, after the company stated that it expects FY21 results to be modestly above prior expectations following a strong start to the new year.
  • Retailer, Next rose 1.7%, after the company raised its FY21 pre-tax profit guidance.
  • On the flipside, Mondi (LON:MNDI) dropped 1.2%, even as it reported strong demand for its packaging services, as online shopping surged and customers looked for more eco-friendly products in the 1Q21 period.
  • The FTSE 100 index advanced 0.5% to close at 7,076.17.

US MARKET REVIEW

  • US markets ended higher yesterday, buoyed by an upbeat domestic weekly jobless claims report.
  • Regeneron Pharmaceuticals rose 3.4%, after the company reported better-than-expected 1Q21 profit and revenue.
  • On the contrary, Norwegian Cruise Line Holdings (NYSE:NCLH) declined 6.8%, after the company posted a higher-than-expected 1Q21 loss.
  • Pfizer (NYSE:PFE) fell 2.0%, following the announcement from US Trade Representative, Katherine Tai that the US supports the waiver of intellectual-property protections on COVID-19 vaccines.
  • The S&P 500 index rose 0.8% to settle at 4,201.62, while the DJIA index advanced 0.9% to close at 34,548.53.
  • The NASDAQ index climbed 0.4% to end the trading session at 13,632.84.

ASIA MARKET REVIEW

  • Asian markets are trading higher this morning, tracking overnight gains on the Wall Street.
  • In Japan, banking companies, Mitsubishi UFJ Financial Group (T:8306) and Sumitomo Mitsui Financial Group (T:8316) have gained 0.2%, each.
  • In Hong Kong, technology stocks, Sunny Optical Technology Group (HK:2382) and AAC Technologies Holdings (HK:2018) have dropped 4.6% and 2.7%, respectively.
  • In South Korea, technology company, Samsung Electronics (KS:005930) has declined 0.5%, while, peer, LG Electronics (KS:066570) has gained 1.3%.
  • The Nikkei 225 index is trading 0.1% higher at 29,364.63.
  • The Hang Seng index is trading 0.5% firmer at 28,775.80, while the Kospi index is trading 0.6% higher at 3,197.35.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices marginally fell to trade at $68.24/bl, extending the previous session’s losses.
  • Yesterday, Brent spot prices fell 0.8% to settle at $68.27/bl, as rising COVID-19 infections in India and certain other regions of the world dampened fuel demand prospects.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.9% to $7.30/bushel.
  • At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,817.99/oz. Yesterday, gold gained 1.6% to close at $1,815.22/oz, as the greenback lost ground and bolstered demand for the safe haven metal.
  • Yesterday, copper rose 1.5% to close at $10,095.50/mt. Aluminium closed 1.6% higher at $2,489.50/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In the US, the number of people filing new claims for unemployment benefits fell below 500,000 for the week ended 30 April, for the first since the COVID-19 pandemic started more than a year ago, signaling that the labour market recovery had entered a new phase amid a booming US economy. Also, nonfarm productivity rebounded in the 1Q21, depressing labour costs growth, but the data has been severely distorted by the COVID-19 pandemic to provide a clear trend.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.28%. Further, the yield on 2023 bond declined to 4.66%, while that for the longer-dated 2030 issue fell to 9.05%.
  • At 06:00 SAST, the US dollar is trading marginally lower against the South African rand at R14.2089, while the euro is trading marginally higher at R17.1441. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R19.7621.
  • Yesterday, the euro advanced against most of the major currencies, after the eurozone retail sales rose by more than expected in March, pointing to pent-up consumer demand as COVID-19 pandemic lockdowns ease. German factory orders rose in March, signalling that manufacturers will support recovery once supply and delivery bottlenecks are overcome. In the UK, the BoE kept its benchmark interest rate at an all-time low and the size of its bond-buying programme unchanged at GBP895.00bn ($1.24tn). It upgraded its 2021 growth outlook for the British economy slightly above analyst expectations.
  • At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.2066, while it has weakened 0.1% against the British pound to trade at GBP0.8676.

ECONOMIC UPDATES

  • The electricity production in South Africa climbed 1.8% in March on a YoY basis. In the prior month, the electricity production had registered a drop of 4.3%.
  • The electricity consumption registered a rise of 3.0% in South Africa on an annual basis, in March. In the previous month, the electricity consumption had fallen 3.8%.
  • In April, the final services PMI in the UK rose to a level of 61.00, compared to a reading of 56.30 in the prior month. Market expectations were for the services PMI to advance to a level of 60.10. The preliminary figures had indicated an advance to 60.10.
  • The BoE maintained its interest rate at 0.1%, in line with market expectations 0.1%.
  • On a monthly basis, the seasonally adjusted factory orders in Germany recorded a rise of 3.0% in March, compared to a revised advance of 1.4% in the previous month. Markets were anticipating factory orders to advance 1.7%.
  • The seasonally adjusted retail sales in the eurozone rose 2.7% in March on a MoM basis, compared to a revised advance of 4.2% in the previous month. Markets were expecting retail sales to climb 1.5%.
  • Number of initial jobless claims fell to a level of 498.00K in week ended 01 May 2021, in the US, higher than market expectations of a fall to 540.00K. In prior week, the seasonally adjusted number of initial jobless claims had recorded a revised level of 590.00 K.
  • In the US, the preliminary non-farm business productivity registered a rise of 5.4% on a QoQ basis in 1Q21, more than market expectations for an advance of 4.3%. The non-farm business productivity had recorded a drop of 3.8% in the previous quarter.
  • The monetary base in Japan climbed 24.3% on an annual basis, in April. In the prior month, the monetary base had advanced 20.8%.
  • Trade surplus in China expanded to $42.85bn in April, compared to market expectations of a trade surplus of $28.10bn. China had posted a trade surplus of $13.80bn in the prior month.

CORPORATE UPDATES

SOUTH AFRICA

  • Sibanye Stillwater (JO:SSWJ) Limited: The gold mining company, in its 1Q21 operating update, stated that precious metals prices remained strong during 1Q21, with palladium and rhodium prices again reaching record levels, supported by ongoing supply disruptions and strong physical demand. The Group achieved full financial deleveraging and resumed industry leading dividends during 2020. Given a stable operational outlook and favourable precious metals fundamentals, the outlook for 2021 and beyond is expected to be positive.
  • Sappi Limited: The pulp and paper company, in its 1H21 results, stated that its revenue decreased to $2.45bn from $2.61bn posted in the corresponding period of the previous year. Its diluted loss per share stood at 7.00c compared with an EPS of 5.00c recorded in the same period of the prior year.
  • Gold Fields (JO:GFIJ) Limited: The gold mining company, in its operating update, stated that the Australian region produced 236koz at AIC of A$1,529/oz ($1,181/oz) and AISC of A$1,442/oz ($1,115/oz). Its mines in Ghana produced 221koz (including 45.0% of Asanko) at AIC of $1,078/oz and AISC of $1,038/oz. Production at Cerro Corona in Peru was impacted by unusually high rainfall during the March quarter, with the mine producing 46koz (gold equivalent) at AIC of $1,160 per gold equivalent ounce and AISC of $1,067 per gold equivalent ounce.
  • AB InBev CEO Brito steps down to be replaced by North America Chief: Carlos Brito will end 15 years of his tenure as CEO of AB InBev in July, to be replaced by its North American division head as the world’s largest brewer seeks to drive beer sales in its global markets.

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