SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red yesterday, led by losses in retail and industrial sector stocks.
- Chemicals and mining explosives company, AECI (JO:AFEJ) plunged 10.3%, after the company projected lower earnings in 1H24, citing lower commodity prices, supply chain issues, and higher operating costs.
- Retailers, Lewis Group (JO:LEWJ), Cashbuild (JO:CSBJ) and Cie Financiere Richemont S.A. (JO:CFRJ) dropped 4.7%, 2.2% and 1.2%, respectively.
- Food companies, RCL Foods (JO:RCLJ), Famous Brands (JO:FBRJ) and Tiger Brands (JO:TBSJ) declined 2.5%, 1.9% and 1.2%, respectively.
- Pharmaceutical companies, Life Healthcare Holdings (JO:LHCJ), Netcare (JO:NTCJ) and Adcock Ingram Holdings (JO:AIPJ) shed 2.2%, 1.8% and 0.9%, respectively.
- The JSE All Share index declined 0.1% to close at 80,595.13.
UK MARKET REVIEW
- The UK market finished firmer yesterday, amid losses in luxury goods and insurance sector stocks.
- Luxury retail company, Burberry Group (LON:BRBY) dropped 2.1%, after industry giant LVMH's (EPA:LVMH) reported slower sales growth in 2Q24.
- Insurance companies, Legal & General Group (LON:LGEN) and Aviva (LON:AV) declined 1.2% and 0.8%, respectively.
- On the other hand, airlines company, easyJet (LON:EZJ) advanced 3.0%, after the company reported a 16.0% rise in pre-tax profit in 3Q24.
- Real estate companies, Barratt Developments (LON:BDEV) and Berkeley Group Holdings (LON:BKGH) gained 2.2% and 1.1%, respectively.
- Miner, Fresnillo (LON:FRES) added 1.3%, after the company confirmed that it was on track to meet its full-year guidance.
- Peers, Antofagasta (LON:ANTO) and Rio Tinto (LON:RIO) rose 1.7% and 1.2%, respectively.
- The FTSE 100 index declined 0.2% to close at 8,153.69.
US MARKET REVIEW
- US markets ended lower yesterday, amid disappointing earnings from major technology companies.
- Electric vehicle company, Tesla (NASDAQ:TSLA) plunged 12.3%, after the company reported its lowest profit margin in more than 5 years and lower earnings in 2Q24.
- Semiconductor companies, Super Micro Computers (NASDAQ:SMCI) and Broadcom (NASDAQ:AVGO) dropped 9.2% and 7.6%, respectively.
- On the contrary, telecommunications company, AT&T (NYSE:T) advanced 5.2%, after the company reported higher than expected wireless subscriber additions in 2Q24 as its higher-tier unlimited plans attracted customers.
- The S&P 500 index fell 2.3% to settle at 5,427.13, while the DJIA index declined 1.2% to close at 39,853.87.
- The NASDAQ index eased 3.6% to end the trading session at 17,342.41.
ASIA MARKET REVIEW
- Asian markets are trading lower this morning, tracking overnight losses on Wall Street.
- In Japan, banking company, SoftBank Group (TYO:9984) has plunged 7.6%.
- On the flipside, transportation and distribution company, Keio Corporation (TYO:9008) has gained 1.8%.
- In Hong Kong, mining company, Zijin Mining Group (HK:2899) has dropped 5.6%.
- On the other hand, real estate company, Longfor Group Holdings (HK:0960) has added 0.8%.
- In South Korea, food company, Sanyang Foods has plummeted 8.3%.
- On the contrary, pharmaceutical company, Celltrion (KS:068270) has advanced 3.9%.
- The Nikkei 225 index is trading 2.5% lower at 38,165.19.
- The Hang Seng index has shed 1.5% to trade at 17,046.66, while the Kospi index is trading 1.7% lower at 2,712.32.
COMMODITIES
- At 05:30 SAST today, Brent prices fell 0.8% to trade at $81.02/bl.
- Yesterday, Brent prices rose 0.9% to settle at $81.71/bl, following a large decline in crude and fuel stocks as well as concerns over weaker global demand. The US Energy Information Administration (EIA) reported that the US crude inventories fell by 3.74mn bls in the week ended 19 July 2024.
- At 05:30 SAST today, gold prices declined 1.1% to trade at $2,371.99/oz. Yesterday, gold declined 0.4% to close at $2,398.84/oz, as a weaker dollar boosted demand for the safe haven yellow metal.
- Yesterday, copper declined 0.3% to close at $9,018.40/mt. Aluminium closed 0.4% lower at $2,303.65/mt.
CURRENCIES
- Yesterday, the South African rand strengthened against the US dollar. In South Africa, the consumer inflation slowed to its lowest level in FY24 in June. In the US, the S&P Global manufacturing PMI unexpectedly declined in July. Moreover, new home sales unexpectedly declined to a 7-month low in June. Meanwhile, the S&P Global services PMI unexpectedly rose in July.
- The yield on benchmark government bonds were unchanged yesterday. The yield on the 2030 bond stood at 9.41%, while that for the longer-dated 2040 issue stood at 11.45%.
- At 05:30 SAST, the US dollar is trading 0.4% higher against the South African rand at R18.4112, while the euro is trading 0.3% higher at R19.9648. At 05:30 SAST, the British pound has gained 0.2% against the South African rand to trade at R23.7402.
- Yesterday, the euro declined against most of the major currencies. In Germany, private sector activity dropped in July, amid deeper decline in manufacturing and slower growth in services activity. In the eurozone, manufacturing activity dropped to a seven month low in July. Moreover, the service sector activity dropped in July. In the UK, both, manufacturing PMI and services PMI improved in July, driven by robust demand and strengthening business confidence,
- At 05:30 SAST, the euro slightly slipped against the US dollar to trade at $1.0842, while it has gained 0.1% against the British pound to trade at GBP0.8410.
ECONOMIC UPDATES
- In South Africa, the consumer price index (CPI) rose 0.1% on a MoM basis in June, compared to a rise of 0.2% recorded in the prior month.
- In South Africa, the CPI rose 5.1% on a YoY basis in June, compared to a rise of 5.2% recorded in the previous month.
- In the UK, the S&P Global manufacturing PMI climbed to a level of 51.80 in July, more than market expectations for a rise to a level of 51.10. The S&P Global manufacturing PMI had recorded a level of 50.90 in the prior month.
- In the UK, the S&P Global services rose to a level of 52.40 in July, less than market expectations and compared to a level of 52.10 in the previous month.
- In Germany, the HCOB manufacturing PMI unexpectedly declined to a level of 42.60 in July, compared to a level of 43.50 recorded in the previous month.
- In Germany, the HCOB services PMI unexpectedly eased to a level of 52.00 in July, compared to a level of 53.10 recorded in the prior month.
- In Germany, the GfK consumer confidence index rose to a level of -18.40 in August, more than market expectations for a rise to a level of -21.00. The GfK consumer confidence index had recorded a revised level of -21.60 in the prior month.
- In the eurozone, the HCOB manufacturing PMI fell to a level of 45.60 in July, compared to a level of 45.80 recorded in the previous month.
- In the eurozone, the HCOB services PMI unexpectedly dropped to a level of 51.90 in July, compared to a level of 52.80 recorded in the previous month.
- In the US, the MBA mortgage applications dropped 2.2% in the week ended 19 July 2024, compared to a rise of 3.9% recorded in the previous week.
- In the US, goods trade deficit narrowed to $96.80bn in June, compared to a deficit of $100.20bn recorded in the previous month.
- In the US, the S&P Global manufacturing PMI unexpectedly declined to a level of 49.50 in July, compared to a level of 51.60 recorded in the previous month.
- In the US, the S&P Global services PMI unexpectedly rose to a level of 56.00 in July, compared to a level of 55.30 recorded in the previous month.
- In the US, new home sales dropped 0.6% on a MoM basis in June, compared to a revised drop of 14.9% recorded in the prior month.
- The Bank of Canada (BoC) slashed its key interest rate by 25 basis points to 4.5%, in line with market expectations.
CORPORATE UPDATES
SOUTH AFRICA
- Vodacom Group Limited (JO:VODJ): The telecommunications company, in its trading update for the quarter ended 30 June 2024, revealed that group revenue increased 1.5% to R36.21bn. South Africa service revenue increased by 1.8% to R15.34bn, supported by an improved prepaid performance. Supported by additional data allocations and good growth in smart devices, data traffic grew 31.3% while beyond mobile services increased by 6.3%, contributing R2.6bn to South Africa’s service revenue of R15.30bn. Having invested R1.9bn in the quarter, it expects to invest around R11.5bn of capital expenditure in the current financial year to further enhance customer experience. Moreover, group financial services revenue increased 8.7% to R3.30bn.
- AECI Limited (JO:AFEJ): The mining and chemicals company, in its 1H24 trading update, revealed that it expects EPS to be 59.0% to 64.0%, lower as compared with 600.00c recorded in the previous month. Also, it expects HEPS to be 54.0% to 60.0%, lower as compared with 603.00c recorded in the prior month. Moreover, the company intends to release its financial results on or about 31 July 2024.