SOUTH AFRICA MARKET REVIEW
- South African markets closed in the green yesterday, buoyed by gains in banking sector stocks and as investors awaited minutes from the US Federal Reserve’s (Fed) monetary policy meeting.
- Investec, Capitec Bank (JO:CPIJ) Holdings and FirstRand (JO:FSRJ) gained 5.9%, 3.0% and 1.9%, respectively.
- Platinum miners, Anglo American Platinum (JO:AMSJ) and Northam Platinum (JO:NHMJ) advanced 0.4% and 0.1%, respectively.
- On the other hand, gold miners, Gold Fields (JO:GFIJ) and Harmony Gold Mining dropped 4.9% and 3.4%, respectively.
- Tobacco company, British American Tobacco (JO:SNHJ) declined 0.4%.
- The JSE All Share index advanced 0.2% to close at 67,740.11.
- The UK market finished firmer yesterday, as investors awaited the US Fed's policy statement.
- WPP (LON:WPP) rose 4.3%, after the company posted organic 1Q21 sales growth on a comparable basis.
- Lloyds Banking Group (LON:LLOY) gained 3.5%, after the company reported better-than-expected 1Q21 profits.
- London Stock Exchange Group (LON:LSEG) added 1.0%, after the company posted higher-than-expected 1Q21 profits.
- On the flipside, Reckitt Benckiser Group PLC (LON:RKT) dropped 3.9%, after the company witnessed a decline in its healthcare operations.
- Persimmon (LON:PSN) shed 0.1%, even after the company reported that its year-to-date forward sales position had improved.
- The FTSE 100 index advanced 0.3% to close at 6,963.67.
US MARKET REVIEW
- US markets ended lower yesterday after the Fed opted to keep key interest rates near zero as expected as well as kept its monetary policy loose.
- Amgen (NASDAQ:AMGN) plunged 7.2%, after the company reported a decline in its 1Q21 profits, due to lower sales as the COVID-19 pandemic continued to affect patient visits and the diagnosis of new patients.
- Advanced Micro Devices (NASDAQ:AMD) dropped 1.4%, even after the company reported better-than-expected 1Q21 results.
- On the contrary, Alphabet (NASDAQ:GOOGL) rose 3.0%, after the company reported higher-than-expected 1Q21 profit and a $50.00bn share buyback.
- The S&P 500 index fell 0.1% to settle at 4,183.18, while the DJIA index declined 0.5% to close at 33,820.38.
- The NASDAQ index eased 0.3% to end the trading session at 14,051.03.
ASIA MARKET REVIEW
- Asian markets are trading higher this morning after the US Fed announced that it was too early to consider rolling back emergency support for the US economy, and after US President, Joe Biden unveiled plans for a $1.80tn stimulus package.
- In Japan, the equity market remains closed on account of a public holiday, In Hong Kong, AAC Technologies Holdings (HK:2018) has added 0.3%.
- In South Korea, LG Display has dropped 3.2%. Yesterday, the Nikkei 225 index advanced 0.2% to settle at 29,053.97.
- Today, the Hang Seng index is trading 0.6% higher at 29,237.64, while the Kospi index is trading 0.1% higher at 3,185.29.
COMMODITIES
- At 06:00 SAST today, Brent spot prices rose 0.8% to trade at $67.02/bl. Meanwhile, workers at a terminal loading Brent in the UK North Sea, a component of the Brent Crude international benchmark, have overwhelmingly voted for a strike in the middle of May if a pay dispute with the local council is not resolved by then—an industrial action that could stop loadings of the Brent grade.
- Yesterday, Brent spot prices rose 0.8% to settle at $66.47/bl, after the US Energy Information Administration reported that US crude inventories advanced by 90,000 bls to 493.10mn bls for the week ended 23 April.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 6.1% to $6.55/bushel.
- At 06:00 SAST today, gold prices advanced 0.3% to trade at $1,786.84/oz. Yesterday, gold gained 0.3% to close at $1,781.68/oz, after the US Fed pledged to maintain its easy monetary policy to aid domestic economic recovery from the COVID-19 pandemic.
- Yesterday, copper rose 0.2% to close at $9,880.25/mt. Aluminium closed 0.2% higher at $2,394.60/mt.
CURRENCIES
- Yesterday, the South African rand strengthened against the US dollar. In the US, the Fed decided to keep its short-term interest rates anchored near zero as it buys at least $120.00bn of bonds each month. Also, the Fed Chairman, Jerome Powell signaled that the central bank is not looking to tighten the monetary policy any time soon, a bullish sign for stocks and other risk assets.
- The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.29%. Further, the yield on 2023 bond advanced to 4.68%, while that for the longer-dated 2030 issue rose to 9.21%.
- At 06:00 SAST, the US dollar is trading marginally lower against the South African rand at R14.2298, while the euro is trading marginally higher at R17.2710. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R19.8552.
- Yesterday, the euro advanced against most of the major currencies. Meanwhile, German consumer morale unexpectedly deteriorated heading into May as rising COVID-19 infections led to a re-tightening of restrictions on shopping, travel and public life in many areas of Europe's largest economy.
- At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.2137, while it has marginally gained against the British pound to trade at GBP0.8699.
ECONOMIC UPDATES
- The economic expectations index climbed to 68.30 in April, in Switzerland. The economic expectations index had recorded a reading of 66.70 in the prior month.
- The consumer confidence index eased unexpectedly to -8.80 in May, in Germany, compared to a revised level of -6.10 in the previous month.
- Preliminary the seasonally adjusted wholesale inventories in the US registered a rise of 1.4% in March, on a monthly basis. The wholesale inventories had registered a rise of 0.9% in the prior month.
- The US has reported an advance goods trade deficit of $90.60bn in March, compared to an advance goods trade deficit of $86.72bn in the prior month.
- The Fed held its interest rate steady at 0.25%. Markets were expecting the central bank to keep its interest rate steady at 0.25%.
- The Fed Chairman, Jerome Powell signaled that the central bank is not looking to tighten the monetary policy any time soon, a bullish sign for stocks and other risk assets.
- On a monthly basis, retail sales in Canada rose 4.8% in February, more than market expectations for an advance of 4.0%. In the previous month, retail sales had recorded a drop of 1.1%.
CORPORATE UPDATES
SOUTH AFRICA
- Life Healthcare Group Holdings Limited (JO:LHCJ): The healthcare company, in its 1H21 trading update, stated that Group revenue from continuing operations grew by between 0.9% and 6.1%. The normalised EBITDA margin from continuing operations for the current period is expected to be lower than the prior period at between 18.2% and 19.0%, due to the impact of COVID-19 on the southern African operations and the additional COVID-19 related costs.
- Astral Foods Limited (JO:ARLJ): The poultry processing company, in its trading update, stated that it expects its EPS and HEPS to be between 571.00c and 618.00c compared with 951.00c recorded in the same period of last year.
- Allied Electronics Corporation Limited (JO:AELJ): The information technology management company, in its FY20 trading update, stated that it expects its basic EPS to be between 3,256.00c and 3,270.00c and its HEPS to be between 124.00c and 137.00c. The increase in basic earnings per share is mainly as a result of the realised profit on the recent demerger of Bytes Technology Group Plc which was finalised on 17 December 2020.
- Absa (JO:ABGJ) begins to plug the gaps in its Executive team: Absa, SA’s third-largest bank by assets, has begun to flesh out its Executive team by appointing a Chief Risk Officer.