Market Review, Commodities, Currencies, Economic & Corporate Update - 25.05.23

South Africa Market Review

• South African markets closed in the red yesterday, ahead of the South African Reserve Bank’s (SARB) interest rate decision and led by losses in mining sector stocks.
• Diversified miners, Kumba Iron Ore (JO:KIOJ), African Rainbow Minerals (JO:ARIJ) and Exxaro Resources (JO:EXXJ) dropped 3.9%, 3.3% and 3.1%, respectively.
• Platinum miners, Impala Platinum (JO:IMPJ) and Anglo American Platinum (JO:AMSJ) declined 2.4% and 1.0%, respectively.
• Lenders, FirstRand (JO:FSRJ) and Standard Bank (JO:SBKJ) eased 1.0% and 0.8%, respectively.
• On the flipside, pharmaceutical companies, Life Healthcare (JO:LHCJ), Aspen Pharmacare (JO:APNJ) and Netcare (JO:NTCJ) advanced 2.2%, 1.8% and 1.4%, respectively.
• Retailers, SPAR Group (JO:SPPJ), Shoprite Holdings (JO:SHPJ) and Clicks Group (JO:CLSJ) gained 2.2%, 1.6% and 0.8%, respectively.
• The JSE All Share index declined 1.5% to close at 75,621.90.

UK Market Review

• The UK market finished weaker yesterday, after domestic core inflation surged to a 31-year high, stoking fears of more rate hikes by the Bank of England.
• Insurance company, Aviva (LON:AV) dropped 5.9%, after the company reported lower net flows in 1Q23 and as investor, Cevian Capital sold its entire stake in the company.
• Banking companies, HSBC Holdings (LON:HSBA), Standard Chartered (LON:STAN), NatWest Group (LON:NWG) and Lloyds Banking Group (LON:LLOY) declined 2.9%, 2.8%, 2.2% and 1.7%, respectively.
• Miners, Rio Tinto (LON:RIO), Antofagasta (LON:ANTO) and Glencore (JO:GLNJ) shed 2.5%, 2.3% and 2.0%, respectively.
• Water utilities companies, United Utilities Group (LON:UU) and Severn Trent (LON:SVT) fell 2.5% and 1.9%, respectively.
• Pharmaceutical companies, AstraZeneca (LON:AZN) and GSK (LON:GSK) eased 2.0% and 1.5%, respectively.
• The FTSE 100 index declined 1.8% to close at 7,267.10.

US Market Review

• US markets ended lower yesterday, amid lack of progress in the US debt ceiling negotiations.
• Technology company, Agilent Technologies (NYSE:A) dropped 6.0%, after the company lowered its annual sales and profit forecasts.
• Peers, International Business Machines (NYSE:IBM), Intel (NASDAQ:INTC) and Cisco Systems (NASDAQ:CSCO) declined 2.0%, 1.7% and 1.0%, respectively.
• Financial services company, Citi Group (NYSE:C) shed 3.1%, after the company cancelled a $7.00bn sale of its Mexican consumer unit, Banamex.
• On the contrary, energy companies, Valero Energy Corporation (NYSE:VLO), Devon Energy (NYSE:DVN) and Exxon Mobil Corporation (NYSE:XOM) advanced 2.0%, 1.1% and 1.0%, respectively.
• The S&P 500 index fell 0.7% to settle at 4,115.24, while the DJIA index declined 0.8% to close at 32,799.92.
• The NASDAQ index eased 0.6% to end the trading session at 12,484.16.

Asia Market Review

• Asian markets are trading mostly lower this morning, amid persistent worries over US debt ceiling.
• In Japan, imaging equipment company, Canon (TYO:7751) has gained 2.1%.
• On the flipside, life insurance company, Dai-ichi Life Holdings (TYO:8750) has declined 2.6%.
• In Hong Kong, pharmaceutical company, Hansoh Pharmaceutical Group (HK:3692) has shed 3.3%.
• On the other hand, consumer electronics company, Xiaomi Corporation (HK:1810) has advanced 2.3%.
• In South Korea, chemical company, ISU chemical (KS:005950) has plunged 8.5%.
• On the contrary, media and films company, Ascendio (KS:012170) has surged 8.0%.
• The Nikkei 225 index is trading 0.5% higher at 30,848.07.
• The Hang Seng index has declined 1.9% to trade at 18,743.69, while the Kospi index is trading 0.3% lower at 2,559.38.

Commodities

• At 05:30 SAST today, Brent prices marginally fell to trade at $78.35/bl.
• Yesterday, Brent prices rose 2.0% to settle at $78.36/bl, after US crude inventories unexpectedly declined and following a warning from the Saudi energy minister which raised the prospect of further OPEC+ production cuts. The US Energy Information Administration (EIA) reported that US crude inventories fell by 12.46mn bls in the week ended 19 May 2023.
• At 05:30 SAST today, gold prices marginally advanced to trade at $1,957.62/oz. Yesterday, gold declined 0.9% to close at $1,957.01/oz.
• Yesterday, copper declined 1.6% to close at $7,909.65/mt. Aluminium closed 0.8% lower at $2,207.95/mt.

Currencies

• Yesterday, the South African rand weakened against the US dollar. In South Africa, consumer price inflation eased to an 11-month low in April. In the US, the number of MBA mortgage applications dropped in the week ended 19 May 2023.
• The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 9.73%. Further, the yield on the longer-dated 2030 issue fell to 11.05%.
• At 05:30 SAST, the US dollar is trading 0.3% higher against the South African rand at R19.303, while the euro is trading 0.1% higher at R20.7275. At 05:30 SAST, the British pound has marginally declined against the South African rand to trade at R23.809.
• Yesterday, the euro mostly advanced against most of the major currencies. In Germany, the Ifo business climate index declined more than expected in May. Moreover, the Ifo current assessment index unexpectedly declined in May.
• At 05:30 SAST, the euro slipped 0.1% against the US dollar to trade at $1.0737, while it has gained 0.1% against the British pound to trade at GBP0.8705.

Economic Updates

• In South Africa, the consumer price index (CPI) rose 0.4% on a MoM basis in April, less than market expectations for a rise of 0.5%. The CPI had advanced 1.0% in the previous month
• In the UK, the CPI rose 1.2% on a MoM basis in April, more than market expectations for a rise of 0.8%. The CPI had advanced 0.8% in the previous month.
• In the UK, the DCLG house price index rose 4.1% on a YoY basis in March, less than market expectations for a rise of 7.6%. The DCLG house price index had recorded a rise of 5.5% in the previous month.
• In Germany, Ifo business climate index dropped to a level of 91.70 in May, more than market expectations for a drop to a level of 93.00. The Ifo business climate index had recorded a revised level of 93.40 in the previous month.
• In Germany, Ifo business expectations index rose to a level of 94.80 in May, more than market expectations and compared to a revised level of 91.70 in the previous month.
• In Germany, Ifo current assessment index declined to a level of 88.60 in May. The index had recorded a revised level of 93.10 in the prior month.
• In the US, the number of MBA mortgage applications declined 4.6% in the week ended 19 May 2023, compared to a drop of 5.7% recorded in the previous week.
• The FOMC minutes signalled uncertainty about interest rate outlook.

Corporate Updates

South Africa

• Reunert Limited (JO:RLOJ): The electronics and electrical equipment company, in its 1H23 results, stated that revenues increased to R6.20bn from R5.11bn posted in the corresponding period of the previous year. Its diluted EPS rose 32.5% from the same period of the prior year to 258.00c.
• Delta Property Fund Limited (JO:DLTJ): The real estate investment trust company, in its FY22 trading update, stated that it expects distributable EPS to be 69.0% and 74.0%, lower compared to 36.91c recorded in the previous year.
• RFG Holdings Limited (JO:RFGJ): The food company, in its 1H23 results, indicated that revenues rose to R3.78bn from R3.43bn posted in the corresponding period of the previous year. Its diluted EPS increased 36.9% from the same period of the prior year to 83.10c.
• Nampak Limited (JO:NPKJ): The packaging company, in its 1H23 results, announced that revenues advanced 4.4% from the same period of the preceding year to R8.42bn. Its diluted loss per share stood at 396.60c, compared to an EPS of 34.20 c recorded in the corresponding period of the previous year.
• Bullish oil prices rise $1.00 after Saudi threat to short-sellers: Oil prices gained more than $1.00 after US inventories and fuel supplies tightened and as a warning from the Saudi Energy Minister to speculators raised the prospect of further OPEC+ output cuts.