Market Review, Commodities, Currencies, Economic & Corporate Update - 28.07.23

  • Market Overview

South Africa Market Review

  • South African markets closed in the green yesterday, boosted by gains in retail sector stocks.
  • Retailers, Mr Price Group (JO: MRPJ ), SPAR Group (JO: SPPJ ), Lewis Group (JO: LEWJ ) and Pick ‘n Pay Stores (JO: PIKJ ) climbed 4.7%, 2.9%, 1.9% and 0.8%, respectively.
  • Property developers, Redefine Properties (JO: RDFJ ), Hammerson (JO: HMNJ ) and Growthpoint Properties (JO: GRTJ ) advanced 3.5%, 2.8% and 2.0%, respectively.
  • Lenders, Capitec Bank Holdings (JO: CPIJ ), Standard Bank Group (JO: SBKJ ), Nedbank Group (JO: NEDJ ) and FirstRand (JO: FSRJ ) gained 2.7%, 2.1%, 2.0% and 1.1%, respectively.
  • Pharmaceutical companies, Adcock Ingram Holdings (JO: AIPJ ), Aspen Pharmacare (JO: APNJ ) and Life Healthcare Group (JO: LHCJ ) rose 2.0%, 1.2% and 1.0%, respectively.
  • On the flipside, gold miners, AngloGold Ashanti (JO: ANGJ ) and Gold Fields (JO: GFIJ ) declined 2.3% and 1.9%, respectively.
  • The JSE All Share index advanced 0.9% to close at 78,267.25.

UK Market Review

  • The UK market finished firmer yesterday, following domestic corporate results and hopes for a global rate hike pause.
  • Energy utility company, Centrica (LON: CNA ) jumped 7.5%, after the company reported upbeat results in 1H23.
  • Media company, Informa (LON: INF ) climbed 4.1%, after the company reported higher revenues in 1H23 and reaffirmed its annual guidance.
  • On the other hand, banking firm, Barclays (LON: BARC ) shed 5.3%, after the company cautioned of growing pressure on its UK business and reported lower revenues in its investment banking unit.
  • Energy company, Shell (LON: RDSa ) declined 1.4%, after the company reported a 56% drop in its 1H23 profits.
  • The FTSE 100 index advanced 0.2% to close at 7,692.76.

US Market Review

  • US markets ended lower yesterday, as bond yields rose following news that the Bank of Japan (BoJ) plans to tweak yield curve control.
  • E-commerce company, eBay (NASDAQ: EBAY ) edged down 10.5%, after the company issued disappointing profit outlook for 3Q23.
  • Airlines company, Southwest Airlines (NYSE: LUV ) shed 8.9%, after the company posted a drop in its 2Q23 profit and said revenue has not yet recovered to pre-pandemic levels.
  • On the contrary, social media company, Meta Platforms (NASDAQ: META ) climbed 4.4%, after the company reported a jump in its 2Q23 advertising revenue.
  • The S&P 500 index fell 0.6% to settle at 4,537.41, while the DJIA index declined 0.7% to close at 35,282.72.
  • The NASDAQ index eased 0.5% to end the trading session at 14,050.11.

Asia Market Review

  • Asian markets are trading mostly lower this morning, after the BoJ kept its benchmark interest rate unchanged and allowed more flexibility to its yield curve control policy.
  • In Japan, automobile company, Nissan Motor (TYO: 7201 ) has declined 3.0%.
  • On the flipside, life insurance company, Dai-ichi Life Holdings (TYO: 8750 ) has advanced 2.0%.
  • In Hong Kong, pharmaceutical company, Hansoh Pharmaceutical (HK: 3692 ) has declined 1.6%.
  • On the other hand, consumer electronics company, Lenovo Group (HK: 0992 ) has gained 1.4%.
  • In South Korea, consumer electronics company, LG Electronics (KS: 066570 ) has dropped 5.5%.
  • On the contrary, automotive parts company, Wooshin System (KS: 017370 ) has jumped 13.0%.
  • The Nikkei 225 index is trading 1.3% lower at 32,453.97.
  • The Hang Seng index has advanced 0.5% to trade at 19,741.00, while the Kospi index is trading 0.2% lower at 2,598.32.

Commodities

  • At 05:30 SAST today, Brent prices fell 0.5% to trade at $83.8/bl, on demand concerns.
  • Yesterday, Brent prices rose 1.6% to settle at $84.24/bl, amid supply constraints and hopes for a rise in Chinese demand and global growth.
  • At 05:30 SAST today, gold prices advanced 0.4% to trade at $1,952.99/oz. Yesterday, gold declined 1.4% to close at $1,944.99/oz, as a weaker dollar boosted demand for the safe haven yellow metal.
  • Yesterday, copper rose 0.5% to close at $8,578.10/mt. Aluminium closed 0.4% lower at $2,204.82/mt.

Currencies

  • Yesterday, the South African rand weakened against the US dollar. In South Africa, the producer price inflation eased to its lowest level in more than two years in June. In the US, GDP grew faster than expected in 2Q23. Moreover, pending homes sales rose for the first time since February in June. Further, the number of people applying for initial jobless claims unexpectedly declined in the week ended 21 July 2023.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 8.91%. Further, the yield on the longer-dated 2030 issue fell to 10.22%.
  • At 05:30 SAST, the US dollar is trading 0.1% lower against the South African rand at R17.83, while the euro is trading marginally lower at R19.5878. At 05:30 SAST, the British pound has declined 0.1% against the South African rand to trade at R22.8101.
  • Yesterday, the euro mostly advanced against most of the major currencies. In the eurozone, the European Central Bank (ECB) raised its key interest rates by 25 basis points to 3.75%, its highest in 23 years.
  • At 05:30 SAST, the euro marginally slipped against the US dollar to trade at $1.098, while it has marginally weakened against the British pound to trade at GBP0.8581.

Economic Updates

  • In South Africa, the producer price index (PPI) unexpectedly dropped 0.3% on a MoM basis in June, compared to a rise of 0.6% recorded in the previous month.
  • In Spain, retail sales rose 6.4% on a YoY basis in June, compared to a rise of 6.0% recorded in the previous month.
  • In Italy, the consumer confidence index dropped to a level of 106.70 in July, more than market expectations for a drop to a level of 107.60. The consumer confidence index had recorded a level of 108.60 in the previous month.
  • In Italy, the business confidence index declined more than expected to a level of 99.30 in July, compared to a revised level of 100.20 in the prior month.
  • In Germany, the GfK consumer confidence index advanced to a level of -24.40 in August, more than market expectations and compared to a revised level of -25.20 in the previous month.
  • The European Central Bank (ECB) raised its key interest rate by 25 basis points to 3.75%, in line with market expectations.
  • In the US, goods trade deficit narrowed to $87.80bn in June, compared to a deficit of $91.30bn recorded in the previous month.
  • In the US, annualised gross domestic product (GDP) rose 2.4% in 2Q23, more than market expectations for a rise of 1.8%. GDP had advanced 2.0% in the prior quarter.
  • In the US, initial jobless claims unexpectedly dropped to a level of 221.00K in the week ended 21 July 2023, compared to a level of 228.00K recorded in the prior week.
  • In the US, pending home sales unexpectedly rose 0.3% on a MoM basis in June, compared to a revised drop of 2.5% recorded in the previous month.
  • In the US, the Kansas Fed manufacturing activity unexpectedly dropped to a level of -20.00 in July, compared to a level of -10.00 recorded in the previous month.
  • In Japan, the Tokyo consumer price index (CPI) rose 3.2% on a YoY basis in July, more than market expectations for a rise of 2.8%. The CPI had advanced 3.1% in the prior month.
  • In Australia, the PPI rose 3.9% on a YoY basis in 2Q23. In the prior quarter, the PPI had recorded a rise of 5.2%.
  • In Australia, retail sales dropped 0.8% on a MoM basis in June, compared to a rise of 0.7% recorded in the previous month.

Corporate Updates

South Africa

  • Anglo American Plc (JO: AMSJ ): The mining company, in its 1H23 results, reported that revenues declined 13.5% from the same period of the preceding year to $15.67bn. Its diluted EPS stood at $1.03, compared with $3.00 recorded in the corresponding period of the previous year. Moreover, the company announced the appointment of Craig Miller as Chief Executive Officer (CEO), with effect from 1 October 2023.
  • Royal Bafokeng Platinum Limited (JO: RBPCBe ): The platinum mining company, in its interim trading update for the six-month period ended 30 June 2023, stated that weaker PGM pricing environment, coupled with lower 4E ounce production and inflationary pressures contributed to a decrease in its earnings. Therefore, it expects loss per share to be 117.00c, as compared with a basic EPS of 765.40c recorded in the previous corresponding period. Moreover, it expects headline loss per share to be 113.80c as compared with HEPS of 767.30c recorded in the previous year. The company intends to release its interim results on or about 1 August 2023.
  • Hammerson Plc (LON: HMSO ): The real estate investment trust company, in its interim results for the six months ended 30 June 2023, indicated that revenues increased to GBP69.10mn, compared with GBP63.70mn posted in the corresponding period of the previous year.
  • Sirius Real Estate Limited (JO: SREJ ): The real estate investment trust company announced that its UK subsidiary BizSpace has exchanged contracts to acquire a portfolio of 2 mixed use industrial assets for a consideration of GBP9.50mn. The two assets are located in Liverpool and Barnsley with a combined area of 71,957 sq ft of predominantly workshop accommodation.
  • Super Group Limited (JO: SPGJ ): The logistics company, in its FY23 trading update, revealed that it expects EPS to be between 454.20c and 480.70c as compared with 378.50c recorded in the previous year. Also, it expects HEPS to be between 456.80c and 483.50c as compared with 380.70c recorded in the previous year. Further, the company intends to publish its annual results for the period ended 30 June 2023 on 29 August 2023.
  • ArcelorMittal South Africa Limited (JO: ACLJ ): The steel company, in its 1H23 results, stated that revenues fell to R21.05bn from R22.18bn posted in the corresponding period of the previous year. Its diluted loss per share stood at 32.00c, compared with an EPS of 276.00c recorded in the corresponding period of the previous year.
  • Oil bounces back from losses: Oil climbed almost 1.0%, recouping losses from the previous session, supported by supply tightness owing to OPEC+ production cuts and renewed optimism on the outlook for Chinese demand and global growth.

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