Market Review, Commodities, Currencies, Economic & Corporate Update - 06.09.23

  • Market Overview

South Africa Market Review

  • South African markets closed in the red yesterday, led by losses in mining and retail sector stocks.
  • Platinum miners, Impala Platinum (JO: IMPJ ), Northam Platinum (JO: NHMJ ) and Anglo American Platinum (JO: AMSJ ) dropped 5.6%, 5.5% and 2.1%, respectively.
  • Retailers, Shoprite Holdings (JO: SHPJ ), SPAR Group (JO: SPPJ ) and Mr Price Group (JO: MRPJ ) declined 5.6%, 3.9% and 1.2%, respectively.
  • Gold miners, Gold Fields (JO: GFIJ ) and AngloGold Ashanti (JO: ANGJ ) shed 2.8% and 1.7%, respectively.
  • Property developers, Emira Property Fund (JO: EMIJ ), Growthpoint Properties (JO: GRTJ ) and Shaftesbury Capital fell 2.2%, 1.2% and 0.8%, respectively.
  • Banks, FirstRand (JO: FSRJ ) and Standard Bank Group (JO: SBKJ ) eased 1.3% and 0.7%, respectively.
  • On the other hand, insurance companies, Santam (JO: SNTJ ), Old Mutual (JO: OMUJ ) and Sanlam (JO: SLMJ ) advanced 2.7%, 0.9% and 0.7%, respectively.
  • The JSE All Share index declined 0.5% to close at 75,016.00.

UK Market Review

  • The UK market finished weaker yesterday, after British services PMI dropped for the first time since January in August amid decline in consumer demand.
  • Retailer, B&M European Value Retail S.A. (LON: BMEB ) shed 3.4%, after the company announced to acquire 51 stores from Wilko Limited.
  • Industrial equipment rental company, Ashtead Group (LON: AHT ) declined 2.9%, after the company slashed its annual UK rental revenue growth guidance, amid softening market conditions.
  • On the other hand, travel & leisure companies, Whitbread (LON: WTB ) and InterContinental Hotels Group (LON: IHG ) advanced 2.3% and 1.4%, respectively.
  • Energy companies, BP (LON: BP ) and Shell (LON: RDSa ) gained 2.0% and 1.0%, respectively, amid surge in in oil prices.
  • The FTSE 100 index declined 0.2% to close at 7,437.93.

US Market Review

  • US markets ended lower yesterday, following a rise in the US Treasury yields and surge in oil prices.
  • Homebuilders, PulteGroup (NYSE: PHM ) and D.R. Horton dropped 5.7% and 4.9%, respectively.
  • Financial services companies, Goldman Sachs Group (NYSE: GS ) and JPMorgan Chase (NYSE: JPM ) each declined 1.1%.
  • On the contrary, technology companies, Oracle (NYSE: ORCL ) and Microsoft (NASDAQ: MSFT ) advanced 2.5% and 1.5%, respectively.
  • The S&P 500 index fell 0.4% to settle at 4,496.83, while the DJIA index declined 0.6% to close at 34,641.97.
  • The NASDAQ index eased 0.1% to end the trading session at 14,020.95.

Asia Market Review

  • Asian markets are trading mostly lower this morning, amid concerns over global economic growth.
  • In Japan, automobile company, Mitsubishi Motor Corporation (TYO: 7211 ) has advanced 2.8%.
  • On the flipside, transportation company, Kawasaki Kisen Kaisha (TYO: 9107 ) has declined 1.6%.
  • In Hong Kong, pharmaceutical company, CSPC Pharmaceutical (HK: 1093 ) has shed 1.9%.
  • On the other hand, real estate company, Longfor Group Holdings (HK: 0960 ) has climbed 4.0%.
  • In South Korea, food company, Samyang Foods has dropped 5.0%. On the contrary, automobile company, KR Motors has surged 15.8%.
  • The Nikkei 225 index is trading 0.7% higher at 33,262.48. The Hang Seng index has declined 0.8% to trade at 18,312.38, while the Kospi index is trading 0.7% lower at 2,564.90.

Commodities

  • At 05:30 SAST today, Brent prices rose 0.1% to trade at $90.15/bl, amid supply concerns following output cuts.
  • Yesterday, Brent prices rose 1.2% to settle at a 10-month high at $90.04/bl, after Saudi Arabia and Russia extended their voluntary production cuts to the end of the year.
  • At 05:30 SAST today, gold prices marginally advanced to trade at $1,926.29/oz. Yesterday, gold declined 0.6% to close at $1,925.81/oz, as a stronger greenback and a rise in the US Treasury yields dented demand for the precious yellow metal.
  • Yesterday, copper rose 0.1% to close at $8,427.50/mt. Aluminium closed 0.8% lower at $2,194.15/mt.

Currencies

  • Yesterday, the South African rand weakened against the US dollar. In South Africa, gross domestic product (GDP) grew more than expected in 2Q23, reflecting moderation in blackouts in June. Separately, in the US, factory orders declined in July.
  • The yield on benchmark government bonds rose yesterday. The yield on 2030 bond rose to 10.41%. Further, the yield on the longer-dated 2040 issue rose to 12.59%.
  • At 05:30 SAST, the US dollar is trading 0.1% lower against the South African rand at R19.1855, while the euro is trading marginally higher at R20.5939. At 05:30 SAST, the British pound has declined marginally against the South African rand to trade at R24.1255.
  • Yesterday, the euro declined against most of the major currencies. In the eurozone, the producer price index (PPI) declined in July, amid a drop in energy prices. Moreover, the services PMI declined more than expected in August. In the UK, services activity fell in August, due to weaker business and consumer spending.
  • At 05:30 SAST, the euro advanced 0.1% against the US dollar to trade at $1.0735, while it has gained 0.1% against the British pound to trade at GBP0.8539.

Economic Updates

  • In South Africa, gross domestic product (GDP) rose 0.6% on a QoQ basis in 2Q23, more than market expectations for a rise of 0.2%. GDP had advanced 0.4% in the previous quarter.
  • In the UK, the S&P Global services PMI dropped to a level of 49.50 in August, less than market expectations and compared to a level of 51.50 recorded in the previous month.
  • In France, the services PMI dropped to a level of 46.00 in August, compared to a level of 47.10 in the previous month. Markets were expecting the services PMI to drop to a level of 46.70.
  • In Germany, the services PMI dropped to a level of 47.30 in August, in line with market expectations. The HCOB services PMI had recorded a level of 52.30 in the previous month.
  • In the Eurozone, the HCOB services PMI dropped to a level of 47.90 in August, more than market expectations for a drop to a level of 48.30. The HCOB services PMI had recorded a level of 50.90 in the previous month.
  • In the Eurozone, the producer price index (PPI) dropped 0.5% on a MoM basis in July, less than market expectations and compared to a drop of 0.4% in the previous month.
  • In the US, factory orders dropped 2.1% on a MoM basis in July, more than market expectations for a drop of 0.1%. Factory orders had advanced 2.3% in the previous month.
  • In Australia, GDP rose 0.4% on a QoQ basis in 2Q23, more than market expectations for a rise of 0.3%. GDP had advanced 0.2% in the previous quarter.
  • The Reserve Bank of Australia kept its key interest rate unchanged at 4.1%, in line with market expectations.

Corporate Updates

South Africa

  • Shoprite Holdings Limited (JO: SHPJ ): The retail company, in its FY23 results, indicated that revenue rose to R219.53bn from R187.53bn posted in the previous year. Its diluted EPS increased 10.1% from the prior year to R11.55.
  • The Foschini Group Limited (JO: TFGJ ): The fashion retail company, in its voluntary trading update for the 22 weeks ended 26 August 2023, revealed that group retail turnover advanced 11.3% compared with the same period of the previous year. TFG Africa recorded retail turnover growth of 16.1% and like-for-like retail turnover growth of 3.3%. Moreover, online retail turnover growth stood at 23.2% with online retail turnover contributing 10.1% to total Group retail turnover compared to the prior period. Further, for the six months ended 30 September 2023, it expects basic EPS to be 15.0% to 25.0%, lower as compared with 461.60c recorded in the corresponding period of the previous year. Likewise, the company expects basic HEPS to be 15.0% to 25.0%, lower as compared with 464.60c recorded in the same period of the previous year.
  • Ayo subsidiary Sizwe Africa to probe irregular expenditure: Technology group Ayo has flagged allegations of financial irregularities at its subsidiary Sizwe Africa IT with heads set to roll at the company.

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