Market Review, Commodities, Currencies, Economic & Corporate Update - 01.12.23

  • Market Overview

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, amid hopes for an end to the US Federal Reserve’s (Fed) rate hike cycle.
  • Pharmaceutical companies, Aspen Pharmacare (JO: APNJ ) and Life Healthcare Group (JO: LHCJ ) advanced 1.7% and 0.6%, respectively.
  • Retailers, Cashbuild (JO: CSBJ ) and SPAR Group (JO: SPPJ ) gained 1.5% and 1.3%, respectively.
  • Gold miners, AngloGold Ashanti (JO: ANGJ ) and Gold Fields (JO: GFIJ ) rose 1.2% and 0.7%, respectively.
  • On the flipside, telecommunications companies, Telkom SA SOC (JO: TKGJ ), Vodacom Group (JO: VODJ ) and Blue Label Telecoms (JO: BLUJ ) dropped 4.5%, 2.0% and 1.3%, respectively.
  • Insurance companies, Old Mutual (JO: OMUJ ) and Discovery Holdings (JO: DSYJ ) declined 2.0% and 1.7%, respectively.
  • Food companies, RCL Foods (JO: RCLJ ) and Astral Foods (JO: ARLJ ) fell 1.2% and 1.1%, respectively.
  • The JSE All Share index advanced 0.4% to close at 75,534.38.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, led by gains in aerospace and defence sector stocks.
  • Paper and packaging companies, Smurfit Kappa Group (LON: SKG ) and DS Smith (LON: SMDS ) jumped 4.7% and 2.3%, respectively.
  • Aerospace and defence companies, Rolls Royce Holdings (LON: RR ) and BAE Systems (LON: BAES ) advanced 2.1% and 1.5%, respectively.
  • Banking firms, Standard Chartered (LON: STAN ), HSBC Holdings (LON: HSBA ) and NatWest Group (LON: NWG ) gained 2.0%, 1.2% and 0.7%, respectively.
  • Pharmaceutical companies, GSK (LON: GSK ) and AstraZeneca (LON: AZN ) rose 1.3% and 0.9%, respectively.
  • On the other hand, water utilities companies, Severn Trent (LON: SVT ) and United Utilities Group (LON: UU ) dropped 4.2% and 3.0% respectively.
  • Miners, Fresnillo (LON: FRES ) and Antofagasta (LON: ANTO ) shed 1.3% and 0.7%, respectively.
  • The FTSE 100 index advanced 0.4% to close at 7,453.75.

US MARKET REVIEW

  • US markets ended mostly higher yesterday, as signs of easing US inflation raised hopes for Fed rate cut.
  • Software company, Salesforce (NYSE: CRM ) jumped 9.4%, after the company projected upbeat profit guidance amid stronger demand for its cloud services.
  • Financial services companies, American Express (NYSE: AXP ), JPMorgan Chase (NYSE: JPM ) and Visa (NYSE: V ) advanced 2.0%, 1.1% and 1.0%, respectively.
  • Consumer goods companies, Johnson & Johnson (NYSE: JNJ ) and Procter & Gamble (NYSE: PG ) rose 1.7% and 1.6%, respectively.
  • On the contrary, automobile company, Ford Motor (NYSE: F ) dropped 3.1%, after the company set a new labour deal at $8.80bn and cut its annual profit forecast due to decline in production from a lengthy strike at its US plants.
  • The S&P 500 index rose 0.4% to settle at 4,567.80, while the DJIA index advanced 1.5% to close at 35,950.89.
  • The NASDAQ index eased 0.2% to end the trading session at 14,226.22.

ASIA MARKET REVIEW

  • Asian markets are trading lower this morning.
  • In Japan, chemicals company, Mitsui Chemicals (TYO: 4183 ) has declined 1.9%.
  • On the flipside, automobile company, Yamaha Motor Corporation (TYO: 7272 ) has advanced 2.1%.
  • In Hong Kong, automobile company, Geely Automobile Holdings (HK: 0175 ) has shed 3.1%.
  • On the other hand, insurance company, Ping An Insurance (HK: 2318 ) has gained 1.3%.
  • In South Korea, robotics company, Doosan Robotics (KS: 454910 ) has dropped 4.5%.
  • On the contrary, chemicals company, Hannong Chemicals (KS: 011500 ) has surged 12.5%.
  • The Nikkei 225 index is trading 0.1% lower at 33,461.71.
  • The Hang Seng index is trading 0.5% lower at 16,955.06, while the Kospi index is trading 1.0% lower at 2,511.01.

COMMODITIES

  • At 05:30 SAST today, Brent prices fell 2.9% to trade at $80.39/bl.
  • Yesterday, Brent prices fell 0.3% to settle at $82.83/bl, after a lower than expected oil production cuts by the OPEC+ for 1Q24.
  • At 05:30 SAST today, gold prices advanced 0.3% to trade at $2,041.33/oz. Yesterday, gold declined 0.4% to close at $2,035.75/oz, as a stronger dollar dented demand for the safe haven yellow metal.
  • Yesterday, copper declined 0.6% to close at $8,331.75/mt. Aluminium closed 0.8% lower at $2,195.75/mt.

CURRENCIES

  • Yesterday, the South African rand weakened against the US dollar. In South Africa, the producer price index (PPI) rose in October. Meanwhile, trade balance registered a deficit in October. Separately, in the US, the number of people filing for initial jobless claims rose less than expected in the week ended 24 November 2023. Moreover, the Chicago PMI unexpectedly expanded for the first time in over a year in November.
  • The yield on benchmark government bonds rose yesterday. The yield on the 2030 bond advanced to 9.98% while that for the longer-dated 2040 issue rose to 12.17%.
  • At 05:30 SAST, the US dollar is trading 0.1% lower against the South African rand at R18.8300, while the euro is trading 0.1% higher at R20.5368. At 05:30 SAST, the British pound has gained 0.1% against the South African rand to trade at R23.8103.
  • Yesterday, the euro declined against most of the major currencies. In Germany, retail sales rose more than expected in October. Meanwhile, the unemployment rate unexpectedly rose in November. In the eurozone, inflation eased more than expected in November. Meanwhile, the unemployment rate remained unchanged in October.
  • At 05:30 SAST, the euro advanced 0.2% against the US dollar to trade at $1.0906, while it has marginally weakened against the British pound to trade at GBP0.8625.

ECONOMIC UPDATES

  • In South Africa, the producer price index ( PPI ) rose 1.0% on a MoM basis in October, less than market expectations for a rise of 1.1%. The PPI had advanced 1.5% in the prior month.
  • In South Africa, trade balance registered a deficit of R12.66bn in October, compared to a revised surplus of R11.97bn in the previous month.
  • In Italy, the unemployment rate unexpectedly advanced to 7.8% in November, compared to 7.6% recorded in the prior month.
  • In Italy, the consumer price index ( CPI ) unexpectedly dropped 0.4% on a MoM basis in November, compared to a drop of 0.2% recorded in the previous month.
  • In France, gross domestic product ( GDP ) unexpectedly dropped 0.1% on a QoQ basis in 3Q23, compared to a rise of 0.1% recorded in the prior quarter.
  • In Germany, retail sales rose 1.1% on a MoM basis in October, more than market expectations for a rise of 0.4%. Retail sales had declined 0.8% in the previous month.
  • In Germany, the unemployment rate rose to 5.9% in November, compared to 5.8% recorded in the previous month.
  • In the eurozone, the CPI dropped 0.5% on a MoM basis in November, compared to a rise of 0.1% recorded in the previous month.
  • In the eurozone, the unemployment rate remained unchanged at 6.5% in October, in line with market expectations.
  • In the US, initial jobless claims rose to a level of 218.00K in the week ended 24 November 2023, less than market expectations for a rise to a level of 220.00K. Initial jobless claims had recorded a revised level of 211.00K in the previous week.
  • In the US, the Chicago Purchasing Manager’s Index rose to a level of 55.80 in November, more than market expectations and compared to a level of 44.00 recorded in the prior month.
  • In Canada, GDP declined 0.3% on a QoQ basis in 3Q23, compared to a revised rise of 0.3% recorded in the previous quarter.
  • In Japan, the unemployment rate fell to 2.5% in October, compared to 2.6% recorded in the previous month.
  • In Japan, the Jibun Bank manufacturing PMI dropped to a level of 48.30 in November, less than market expectations for a drop to a level of 48.10. The Jibun Bank manufacturing PMI had recorded a level of 48.70 in the prior month.
  • In China, the Caixin manufacturing PMI rose to a level of 50.70 in November, more than market expectations for a rise to a level of 49.80. The Caixin manufacturing PMI had recorded a level of 49.50 in the prior month.

CORPORATE UPDATES

SOUTH AFRICA

  • SPAR Group Limited (JO: SPPJ ): The food retail company, in its FY23 results, reported that its revenue advanced 10.1% from the preceding year to R149.32bn. Its diluted EPS stood at 208.50c, compared with 1,116.90c recorded in the previous year.
  • Resilient REIT Limited (JO: RESJ ): The real estate investment trust company, in its pre-close trading update, revealed that foot traffic increased by 4.9% for the 10 months ended October 2023 as compared with the previous year. During this period, comparable sales growth stood at 5.0%. Moreover, vacancies reduced from 1.9% as at June 2023 to 1.5%. Furthermore, rentals for renewals and new leases increased on average by 7.9% as compared with the previous year.
  • Lewis Group Limited (JO: LEWJ ): The retail company, in its 1H24 results, indicated that its revenue rose to R3.83bn from R3.54bn posted in the corresponding period of the previous year. Its diluted EPS increased 2.7% from the same period of the prior year to 347.60c.
  • Oil prices steady ahead of OPEC+ meeting on supply cuts: Oil prices were little changed as investors eagerly awaited the outcome of an anticipated OPEC+ meeting that could lead to deeper supply cuts in 2024.

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