Market Review, Commodities, Currencies, Economic & Corporate Update - 15.05.24

  • Market Overview

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red yesterday, as investors await US inflation data for further insights on monetary policy decision.
  • Telecommunication company, MTN Group (JO: MTNJ ) plunged 8.5%, after the company reported a 18.8% drop in service revenue in 1Q24, amid challenging macro environment.
  • Peers, Vodacom Group (JO: VODJ ) and Blue Label Telecoms (JO: BLUJ ) declined 3.2% and 1.2%, respectively.
  • Insurance companies, Discovery (JO: DSBPp ), Old Mutual (JO: OMUJ ) and Sanlam (JO: SLMJ ) dropped 8.1%, 2.2% and 1.1%, respectively.
  • Pharmaceutical companies, Netcare (JO: NTCJ ), Adcock Ingram Holdings (JO: AIPJ ) and Life Healthcare (JO: LHCJ ) shed 3.6%, 1.7% and 1.2%, respectively.
  • On the flipside, diversified miners, Kumba Iron Ore (JO: KIOJ ), Pan African Resources (JO: PANJ ) and Merafe Resources (JO: MRFJ ) advanced 3.1%, 2.1% and 1.6%, respectively.
  • The JSE All Share index declined 0.1% to close at 78,632.56.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, led by gains in retail sector stocks.
  • Retailers, Ocado Group (LON: OCDO ) and Burberry group jumped 8.1% and 2.0%, respectively.
  • Telecommunications company, Vodafone Group (LON: VOD ) advanced 4.7%, after the company reported a 2.2% rise in organic earnings in FY24.
  • Banking firms, Barclays (LON: BARC ), NatWest Group (LON: NWG ) and HSBC Holdings (LON: HSBA ) gained 1.2%, 1.1% and 1.0%, respectively.
  • On the other hand, miner, Anglo American (JO: AGLJ ) dropped 3.2%, after the company announced significant changes to its business structure, including divestments and spin-offs..
  • Online betting company, Flutter Entertainment (LON: FLTRF ) declined 1.9%, after the company reported widened net losses in 1Q24.
  • The FTSE 100 index advanced 0.2% to close at 8,428.13.

US MARKET REVIEW

  • US markets ended higher yesterday, amid dovish comments from US Federal Reserve (Fed) Chair Jerome Powell.
  • Technology companies, Oracle (NYSE: ORCL ), Intel (NASDAQ: INTC ) and Microsoft (NASDAQ: MSFT ) advanced 3.9%, 1.8% and 0.7%, respectively.
  • Pharmaceutical companies, Moderna (NASDAQ: MRNA ) and Eli Lilly (NYSE: LLY ) & Company gained 2.1% and 0.8%, respectively.
  • Financial services companies, JPMorgan Chase (NYSE: JPM ), American Express (NYSE: AXP ) and Goldman Sachs Group (NYSE: GS ) rose 1.4%, 1.2% and 1.1%, respectively.
  • On the contrary, transportation and delivery services companies, FedEx Corporation (NYSE: FDX ) and United Parcel Service (NYSE: UPS ) dropped 2.9% and 1.8%, respectively.
  • The S&P 500 index rose 0.5% to settle at 5,246.68, while the DJIA index advanced 0.3% to close at 39,558.11.
  • The NASDAQ index climbed 0.8% to end the trading session at 16,511.18.

ASIA MARKET REVIEW

  • Asian markets are trading higher this morning.
  • In Japan, consumer electronics company, Sony Group (NYSE: SONY ) has surged 9.1%.
  • Automobile company, Isuzu Motors (TYO: 7202 ) has advanced 5.0%.
  • On the flipside, pharmaceutical company, Sumitomo Pharma (TYO: 4506 ) has dropped 6.8%.
  • Chemical company, Nissan Chemical (TYO: 4021 ) has shed 4.2%.
  • In Hong Kong and South Korea, the markets are closed on account of a public holiday.
  • Yesterday, the Hang Seng index fell 0.2% to close at 19,073.71, while the Kospi index is advanced 0.1% to close at 2,730.34.
  • Today, the Nikkei 225 index is trading 0.4% higher at 38,491.15.

COMMODITIES

  • At 05:30 SAST today, Brent prices rose 0.8% to trade at $83.03/bl.
  • Yesterday, Brent prices fell 1.2% to settle at $82.38/bl, on supply concerns amid rising tensions in the Middle East and wildfires in Canada. Meanwhile, the American Petroleum Institute (API) reported that the US crude oil inventories declined by 3.10mn bls in the week ended 10 May 2024.
  • At 05:30 SAST today, gold prices advanced 0.1% to trade at $2,358.51/oz. Yesterday, gold gained 0.7% to close at $2,355.88/oz, ahead of US inflation data.
  • Yesterday, copper declined 0.8% to close at $10,008.71/mt. Aluminium closed 0.1% higher at $2,551.00/mt.

CURRENCIES

  • Yesterday, the South African rand weakened against the US dollar. In South Africa, the unemployment rate rose in 1Q24. In the US, the producer price index (PPI) increased more than expected in April. Moreover, the NFIB business optimism index unexpectedly rose in April.
  • The yield on benchmark government bonds fell yesterday. The yield on the 2030 bond declined to 10.45%, while that for the longer-dated 2040 issue fell to 12.55%.
  • At 05:30 SAST, the US dollar is trading 0.1% lower against the South African rand at R18.3755, while the euro is trading slightly higher at R19.8974. At 05:30 SAST, the British pound has marginally gained against the South African rand to trade at R23.1552.
  • Yesterday, the euro advanced against most of the major currencies. In Germany, the consumer price inflation held steady in April, in line with expectations. Moreover, the ZEW economic sentiment index grew for a tenth consecutive month in May to its highest levels in over two years. In the eurozone, the ZEW economic sentiment index rose more than expected in May.
  • At 05:30 SAST, the euro advanced 0.1% against the US dollar to trade at $1.0828, while it has marginally gained against the British pound to trade at GBP0.8595.

ECONOMIC UPDATES

  • In South Africa, the unemployment rate rose to 32.9% in 1Q24, compared to 32.1% recorded in the previous quarter.
  • In the UK, the ILO unemployment rate rose to 4.3% in March, in line with market expectations. The ILO unemployment rate stood at 4.2% in the previous month.
  • In Spain, the consumer price index (CPI) rose 0.7% on a MoM basis in April, in line with the market expectations. The CPI had recorded a rise of 0.8% in the prior month.
  • In Germany, the CPI rose 0.5% on a MoM basis in April, in line with the market expectations and compared to a rise of 0.4% recorded in the prior month.
  • In Germany, the ZEW economic sentiment index climbed to a level of 47.10 in May, more than market expectations for a rise to a level of 46.30. The ZEW economic sentiment index had recorded a level of 42.90 in the prior month.
  • In Germany, the ZEW current situation index rose to a level of -72.30 in May, more than market expectations and compared to a level of -79.20 recorded in the prior month.
  • In the eurozone, the ZEW economic sentiment index rose to a level of 47.00 in May, more than market expectations for a rise to a level of 46.10. The ZEW economic sentiment index had recorded a level of 43.90 in the prior month.
  • In the US, the NFIB business optimism index unexpectedly rose to a level of 89.70 in April, compared to a level of 88.50 recorded in the previous month.
  • In the US, the producer price index (PPI) rose 0.5% on a MoM basis in April, more than market expectations for a rise of 0.3%. The PPI had recorded a revised fall of 0.1% in the prior month.

CORPORATE UPDATES

SOUTH AFRICA

  • MTN Group Limited (JO: MTNJ ): The telecommunications company, in its operational update for the period ended 31 March 2024, revealed that group service revenue decreased by 18.8% to R42.90bn. Meanwhile, total subscribers increased by 1.0% to 287.60mn. Active data subscribers increased by 7.8% to 149.20mn. Moreover, active Mobile Money (MoMo) monthly active users (MAU) rose by 6.2% to 65.50mn. Fintech transaction volumes increased by 18.3% to 4.80bn and transaction value rose by 11.2% to US$72.30bn.
  • Equites Property Fund Limited (JO: EQUJ ): The real estate investment trust company, in its FY24 results, reported that gross property revenue fell to R2.48bn from R3.21bn posted in the previous year. Its diluted EPS stood at 145.80c, compared with a loss per share 81.60c recorded in the previous year.
  • Dipula Income Fund Limited (JO: DIBJ ): The real estate investment trust company, in its 1H24 results, reported that its revenue advanced 9.2% from the same period of the preceding year to R754.98mn. Its diluted EPS stood at 23.17c, compared with 28.07c recorded in the corresponding period of the previous year.
  • Transaction Capital Limited (JO: TCPJ ): The financial services company, in its 1H24 trading update, indicated that basic loss per share is expected to be 15.0% to 25.0%, lower as compared with 222.00c recorded in the previous year. Also, it expects headline loss per share to be 17.0% to 27.0%, lower as compared with 222.30c recorded in the previous year.
  • Delta Property Fund Limited (JO: DLTJ ): The real estate investment trust company announced that it has entered into separate agreements with Siguroni Investments Proprietary Limited and Candy Sun Liquor Proprietary Limited, to dispose of two of its properties as following: the disposal to Siguroni of the letting enterprise situated at 149-151 St Andrews Street, Bloemfontein, Free State, together with all buildings and improvements thereon, as more commonly known as ‘Trustfontein’; the disposal to Candy Sun Liquor of the property situated at 5-7 Elliot Street, Kimberley, Northern Cape, together with all buildings and improvements thereon, as more commonly known as ‘5/7 Elliot’ for a combined cash consideration of R19.30mn.
  • Oil hardly changed as focus is fixed on OPEC report: Oil prices were little changed as investors eyed fresh drivers, including upcoming US inflation indicators and a monthly report from oil cartel OPEC this week.

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