Market Review, Commodities, Currencies, Economic & Corporate Update - 28.03.24

  • Market Overview

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, after the South African Reserve Bank (SARB) kept its key interest rates unchanged.
  • Telecommunications companies, Telkom SA SOC (JO: TKGJ ), Blue Label Telecoms (JO: BLUJ ), MTN Group (JO: MTNJ ) and Vodacom Group (JO: VODJ ) advanced 3.9%, 3.3%, 2.0% and 1.4%, respectively.
  • Diversified miners, Pan African Resources (JO: PANJ ) and Merafe Resources (JO: MRFJ ) gained 3.0% and 1.9%, respectively.
  • Gold miners, Harmony Gold Mining (JO: HARJ ), AngloGold Ashanti (JO: ANGJ ) and Gold Fields (JO: GFIJ ) rose 1.6%, 0.9% and 0.8%, respectively.
  • On the flipside, property developers, Delta Property Fund (JO: DLTJ ), Emira Property Fund (JO: EMIJ ) and Redefine Properties (JO: RDFJ ) dropped 7.1%, 1.1% and 1.0%, respectively.
  • Platinum miners, both., Impala Platinum (JO: IMPJ ) and Anglo American Platinum (JO: AMSJ ) declined 3.7% each.
  • The JSE All Share index advanced 0.4% to close at 73,909.50.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, as investors remained cautious ahead of US inflation data.
  • Paper and packaging company, DS Smith (LON: SMDS ) surged 10.2%, after the company confirmed that it was in discussions with International Paper over an all-stock buyout for GBP5.72bn ($7.22bn).
  • Specialised technical products company, Diploma (LON: DPLM ) jumped 9.5%, after the company announced the acquisition of Peerless Aerospace Fastener for a consideration of GBP236.00mn ($297.88mn).
  • Miners, Fresnillo (LON: FRES ), Rio Tinto (LON: RIO ) and Glencore (LON: GLEN ) (JO: GLNJ ) advanced 2.5%, 1.2% and 1.1%, respectively.
  • On the other hand, banking firms, Standard Chartered (LON: STAN ) and HSBC Holdings (LON: HSBA ) dropped 2.3% and 2.0%, respectively.
  • Energy companies, BP (LON: BP ) and Shell (LON: RDSa ) declined 1.4% and 1.3%, respectively.
  • The FTSE 100 index marginally advanced to close at 7,931.98.

US MARKET REVIEW

  • US markets ended higher yesterday, as investors await the US inflation data and the Federal Reserve’s preferred inflation gauge.
  • Pharmaceutical company, Merck & Company (NYSE: MRK ) jumped 5.0%, after the US Food and Drug Administration (FDA) approved its therapy for adults suffering from a rare lung condition.
  • Technology companies, Intel (NASDAQ: INTC ), Apple (NASDAQ: AAPL ) and International Business Machines (NYSE: IBM ) advanced 4.2%, 2.1% and 1.2%, respectively.
  • Financial services companies, Goldman Sachs Group (NYSE: GS ), JPMorgan Chase (NYSE: JPM ) and American Express (NYSE: AXP ) rose 2.2%, 1.9% and 1.5%, respectively.
  • The S&P 500 index rose 0.9% to settle at 5,248.49, while the DJIA index advanced 1.2% to close at 39,760.08.
  • The NASDAQ index climbed 0.5% to end the trading session at 16,399.52.

ASIA MARKET REVIEW

  • Asian markets are trading mostly lower this morning.
  • In Japan, paper company, Nippon Paper Industries (TYO: 3863 ) has declined 3.3%.
  • On the flipside, electric cables company, Fujikura (TYO: 5803 ) has gained 2.3%.
  • In Hong Kong, life insurance company, China Life Insurance (HK: 2628 ) has advanced 3.9%.
  • On the other hand, insurance company, AIA Group (HK: 1299 ) has shed 2.2%.
  • In South Korea, chemical company, Youl Chon Chemical (KS: 008730 ) has dropped 5.9%.
  • On the contrary, bio-ethanol products company, Enplus (KS: 074610 ) Company has surged 8.4%.
  • The Nikkei 225 index is trading 1.2% lower at 40,283.44.
  • The Hang Seng index has gained 1.1% to trade at 16,569.64, while the Kospi index is trading 0.2% lower at 2,750.75.

COMMODITIES

  • At 05:30 SAST today, Brent prices rose 0.6% to trade at $86.57/bl.
  • Yesterday, Brent prices fell 0.2% to settle at $86.09/bl, amid stronger dollar and following a surprise rise in the US crude stocks. The US Energy Information Administration (EIA) reported that the US crude inventories advanced by 3.18mn bls in the week ended 22 March 2024.
  • At 05:30 SAST today, gold prices marginally advanced to trade at $2,194.97/oz. Yesterday, gold gained 0.7% to close at $2,194.02/oz, as investors awaited key US inflation data for further cues on the US Fed’s policy path.
  • Yesterday, copper slightly declined to close at $8,744.24/mt. Aluminium closed 0.8% lower at $2,284.90/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In South Africa, the SARB kept its benchmark interest rate unchanged, in line with market expectations. In the US, the number of MBA mortgage applications declined in the week ended 22 March 2024.
  • The yield on benchmark government bonds fell yesterday. The yield on the 2030 bond declined to 10.82%, while that for the longer-dated 2040 issue fell to 13.32%.
  • At 05:30 SAST, the US dollar is trading marginally higher against the South African rand at R18.9163, while the euro is trading marginally lower at R20.4732. At 05:30 SAST, the British pound has declined 0% against the South African rand to trade at R23.8934.
  • Yesterday, the euro declined against most of the major currencies. In the eurozone, the economic sentiment index advanced to a 3-month high in March. Moreover, both, consumer confidence and business climate index rose in March.
  • At 05:30 SAST, the euro marginally slipped against the US dollar to trade at $1.0824, while it has slightly gained against the British pound to trade at GBP0.8570.

ECONOMIC UPDATES

  • The South African Reserve Bank (SARB) kept its benchmark interest rate unchanged at 8.25%, in line with market expectations.
  • In France, the consumer confidence index rose to a level of 91.00 in March, compared to a revised level of 90.00 recorded in the prior month.
  • In Spain, the consumer price index (CPI) rose 0.8% on a MoM basis in March, more than market expectations for a rise of 0.6%. The CPI had recorded a rise of 0.4% in the prior month.
  • In the eurozone, the business climate index rose to a level of -0.30 in March, compared to a revised level of -0.41 recorded in the prior month.
  • In the eurozone, the consumer confidence index recorded a level of -14.90 in March, in line with market expectations and compared to a level of -15.50 recorded in the prior month.
  • In the eurozone, the economic sentiment index climbed to a level of 96.30 in March, in line with market expectations. The economic sentiment index had recorded a revised level of 95.50 recorded in the prior month.
  • In the US, the MBA mortgage applications dropped 0.7% in the week ended 22 March 2024, compared to a drop of 1.6% recorded in the previous week.
  • In New Zealand, the business confidence index declined to a level of 22.90 in March, as compared to a level of 34.70 recorded in the prior month.

CORPORATE UPDATES

SOUTH AFRICA

  • Old Mutual Limited (JO: OMUJ ): The insurance company, in its FY23 results, indicated that insurance revenue rose to R68.26bn from R63.30bn posted in the previous year. Its diluted EPS increased 35.9% from the prior year to 154.10c.
  • Datatec Limited (JO: DTCJ ): The information and communication technology company, in its trading update for the year ended 29 February 2024, revealed that it expects group revenue to increase 5.8% to $5.44bn. The company intends to release its FY24 results on or about 27 May 2024.
  • Burstone Group Limited (JO: BTNJ ): The real estate investment trust company, in its voluntary annual trading update, revealed that its South African portfolio is expected to deliver like-for-like base net property income (NPI) growth of approximately 1.0% to 2.0%. Moreover, the company expects total vacancies to increase to approximately 5.0%, largely due to a single vacancy in the office sector that will arise at the end of March. The company intends to release results for the year ending 31 March 2024 on 22 May 2024.
  • PPC Limited (JO: PPCJ ): The cement company, in its operational update for the ten-month period ended 31 January 2024, revealed that group revenue increased by 27.6% as compared with the previous year. The revenue was driven mainly by continued strong growth in the company’s Zimbabwe operations. Cement sales volumes decreased by 4.0% as compared with previous year. Group EBITDA margins improved to 13.6% in the current period from 9.9% in the comparable period.
  • Metair Investments Limited (JO: MTAJ ): The industrial products company, in its FY23 results, indicated that revenue rose to R15.86bn from R13.91bn posted in the previous year. Its diluted EPS stood at 48.00c, compared with a loss per share of 20.00c recorded in the previous year.
  • RMB pushes telecom infrastructure investment: Rand Merchant Bank (RMB) continues to push its funding and investment in telecom infrastructure, now helping to fund the recent sale of Telkom’s SwitftNet for almost R7.00bn.

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