Market Review, Commodities, Currencies & Corporate Update - 12.05.21

  • Market Overview
  • Editor's Pick

South Africa Market Review

  • South African markets closed in the red yesterday, pulled down by broad-based losses in gold and platinum mining sector stocks and as surging commodity prices raised concerns about inflation.
  • Gold mining companies, Harmony Gold Mining (JO: HARJ ) and Gold Fields (JO: GFIJ ) dropped 5.4% and 2.3%, respectively.
  • Platinum miners, Northam Platinum (JO: NHMJ ), Impala Platinum (JO: IMPJ ) Holdings and Royal Bafokeng Platinum declined 2.8%, 2.3% and 1.8%, respectively.
  • Tobacco company, British American Tobacco (JO: SNHJ ) lost 2.0% and market heavyweight, Naspers (JO: NPNJn ) fell 1.8%.
  • The JSE All Share index declined 1.7% to close at 67,241.20.

UK Market Review

  • The UK market finished weaker yesterday, as worries about rising inflation dampened investor sentiment.
  • Renishaw plunged 6.7%, following a report that the company was struggling to attract takeover interests due to a high valuation and a list of ownership demands.
  • Retailers, Next (LON: NXT ), Burberry (LON: BRBY ) and J Sainsbury (LON: SBRY ) dropped 4.7%, 4.6% and 0.9%, respectively.
  • Natwest Group (LON: NWG ) fell 3.4%, after the UK government completed the sale of GBP1.10bn ($1.55bn) in its shares at a discounted price.
  • On the flipside, London Stock Exchange Group (LON: LSEG ) added 0.1%.
  • The FTSE 100 index declined 2.5% to close at 6,947.99.

US Market Review

  • US markets ended lower yesterday, pulled down by losses in technology sector stocks and on speculation that rising inflation pressure could prompt interest rate hikes sooner.
  • Intel (NASDAQ: INTC ), Apple (NASDAQ: AAPL ) and Cisco System (NASDAQ: CSCO ) dropped 1.7%, 0.7% and 0.6%, respectively.
  • L Brands (NYSE: LB ) fell 1.8%, after the company announced that it would separate Victoria’s Secret and Bath & Body Works into two publicly traded companies through a tax-free spinoff that should be completed in August 2021.
  • The S&P 500 index fell 0.9% to settle at 4,152.10, while the DJIA index declined 1.4% to close at 34,269.16.
  • The NASDAQ index eased 0.1% to end the trading session at 13,389.43.

Asia Market Review

  • Asian markets are trading lower this morning, as investors remain cautious over growing inflation worries.
  • In Japan, Nissan Motor (T: 7201 ) has plunged 13.2%, after it announced that its FY20 operating loss widened to JPY150.65bn ($1.38bn) compared with the prior year.
  • In Hong Kong, oil company, CNOOC (HK: 0883 ) has declined 1.0%.
  • In South Korea, technology companies, LG Electronics (KS: 066570 ) and Samsung Electronics (KS: 005930 ) have dropped 2.0% and 1.4%, respectively.
  • The Nikkei 225 index is trading 1.4% lower at 28,217.08.
  • The Hang Seng index is trading 0.1% weaker at 27,986.20, while the Kospi index is trading 2.0% lower at 3,144.47.

Commodities

  • At 06:00 SAST today, Brent spot prices fell 0.1% to trade at $68.48/bl, reversing the previous session’s gains.
  • Yesterday, Brent spot prices rose 0.5% to settle at $68.56/bl, on lingering fears of gasoline shortages due to an outage at the largest US fuel pipeline system after a cyber-attack. Also, the American Petroleum Institute reported that crude oil inventories declined by 2.50mn bls for the week ended 7 May. Meanwhile, OPEC raised its forecast for crude demand by 200,000 bpd and stuck to its prediction of a strong recovery in global oil demand this year, as growth in China and the US counters the coronavirus crisis in India.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 1.5% to $7.3225/bushel.
  • At 06:00 SAST today, gold prices declined 0.6% to trade at $1,826.94/oz. Yesterday, gold gained 0.1% to close at $1,837.47/oz, as rising US Treasury yields countered support from a weaker dollar.
  • Yesterday, copper rose 0.7% to close at $10,448.50/mt. Aluminium closed 0.7% lower at $2,500.70/mt.

Currencies

  • Yesterday, the South African rand strengthened against the US dollar, after the manufacturing sector showed recovery in March, rising at its fastest pace in almost two years, as COVID-19 second-wave lockdown conditions eased and thus providing a minor first-quarter bump for the economy. In the US, New York Federal Reserve (Fed) Bank President, John Williams stated that the Libor benchmark is unreliable, and the market volatility seen at the start of the pandemic is evidence that funding markets based on the rate can crumble under stress. On the data front, job openings popped to a record high in March, as employers struggled to find workers to fill those positions.
  • The yield on benchmark government bonds mostly rose yesterday. The yield on 2026 bond rose to 7.29%. Further, the yield on 2023 bond advanced to 4.66%, while that for the longer-dated 2030 issue fell to 8.95%.
  • At 06:00 SAST, the US dollar is trading 0.2% higher against the South African rand at R14.0260, while the euro is trading marginally higher at R17.0065. At 06:00 SAST, the British pound has marginally declined against the South African rand to trade at R19.7943.
  • Yesterday, the euro declined against most of the major currencies, Meanwhile, data indicated that German investor sentiment surged to its highest level in May, since the start of the COVID-19 pandemic, pointing to a significant upswing in Europe’s largest economy in the coming six months. A separate gauge of current conditions rose from the prior month.
  • At 06:00 SAST, the euro slipped 0.2% against the US dollar to trade at $1.2125, while it has marginally gained against the British pound to trade at GBP0.8591.

Economic Updates

  • In South Africa, the seasonally adjusted manufacturing production index advanced 3.4% in March on a monthly basis. The manufacturing production index had fallen 1.2% in the previous month.
  • In March, on a MoM basis, the seasonally adjusted industrial production in Italy slid 0.1%, compared to market expectations of an advance of 0.4%. In the previous month, industrial production had climbed by a revised 0.1%.
  • Compared to a level of 70.70 in the previous month, the economic sentiment index in Germany registered a rise to 84.40 in May. Market anticipations were for the economic sentiment index to advance to a level of 72.00.
  • The current situation index rose to a level of -40.10 in May, in Germany, compared to a level of -48.80 in the prior month. Market expectations were for the current situation index to rise to -41.60.
  • In Germany, the wholesale price index rose 1.1% on a monthly basis, in April. In the previous month, the wholesale price index had climbed 1.7%.
  • In May, the economic sentiment index rose to a level of 84.00 in the eurozone. The economic sentiment index had recorded a reading of 66.30 in the previous month.
  • The small business optimism index climbed to 99.80 in April, in the US, compared to a level of 98.20 in the previous month.
  • JOLTs job openings in the US rose unexpectedly to 8123.00K in March, compared to a revised level of 7526.00 K in the previous month.

Corporate Updates

South Africa

  • Barloworld Limited (LON: BWOB ): The fleet management, product support and logistics solutions company, in its 1H21 trading update, stated that it expects its basic EPS to be between 337.60c and 405.10c compared with a loss per share of 729.70c.
  • Harmony Gold Mining Company Limited (JO: HARJ ): The gold mining company, in its 9M21 operating update, stated that operating free cash flow was up 78.0% to R5.30bn ($335.00mn) compared to R2.97bn ($199.00mn) for the previous period. Quarter-on-quarter, production declined 12.2% from 13,425kg (431,622oz) to 11,786kg (378,927oz). The decline in production was predominantly as a result of an uncharacteristically slow start-up in January 2021 after the December 2020 break.
  • Rebosis Property Fund Limited (JO: REAJ ): The real estate investment company, in its 1H21 results, revealed that its property income declined from the same period of the preceding year to R849.20mn. Its diluted EPS per share A stood at 146.36c, compared with 139.39c recorded in the corresponding period of the previous year.
  • Oil prices down as worries about pipeline outage fade: Oil prices fell on fading fears of a prolonged outage of the largest US fuel pipeline system, while India’s coronavirus crisis showed scant sign of easing.

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