Market Review, Corporate Updates, Commodities & Currencies - 03.02.23

South Africa Market Review

• South African markets closed in the red yesterday, following rate hikes by the major central banks and led by losses in banking sector stocks.
• Banks, Standard Bank Group (JO: SBKJ ), Investec (JO: INLJ ) and FirstRand (JO: FSRJ ) declined 1.1%, 1.0% and 0.7%, respectively.
• On the flipside, diversified miners, Kumba Iron Ore (JO: KIOJ ), Merafe Resources (JO: MRFJ ) and Exxaro Resources (JO: EXXJ ) climbed 4.0%, 1.5% and 0.9%, respectively.
• Platinum miners, Northam Platinum (JO: NHMJ ), Anglo American Platinum (JO: AMSJ ) and Impala Platinum (JO: IMPJ ) advanced 3.4%, 3.0% and 2.2%, respectively.
• Retailers, Clicks Group (JO: CLSJ ), SPAR Group (JO: SPPJ ) and Shoprite Holdings (JO: SHPJ ) gained 2.7%, 1.0% and 0.6%, respectively.
• Property developers, Capital & Counties Properties (JO: CCOJ ) and Growthpoint Properties (JO: GRTJ ) rose 2.5% and 2.0%, respectively.
• The JSE All Share index marginally declined to close at 79,802.09.

UK Market Review

• The UK market finished firmer yesterday, after the Bank of England (BoE) projected a lower recession in 2023 and raised its benchmark interest rate for the tenth month in a row.
• Retailer, JD Sports Fashion (LON: JD ) surged 11.2%, after the company stated that it aims to grow revenues and margins by double digits over the next five years.
• Peers, B&M European Value Retail S.A. (LON: BMEB ), Next (LON: NXT ) and Burberry (LON: BRBY ) advanced 5.4%, 4.4% and 2.0%, respectively.
• Telecommunications company, BT Group (LON: BT ) gained 6.9%, after the company reiterated its full year guidance.
• On the contrary, oil company, Shell (LON: RDSa ) declined 1.2%, despite reporting upbeat earnings and profit in FY22.
• The FTSE 100 index advanced 0.8% to close at 7,820.16.

US Market Review

• US markets ended mostly higher yesterday, buoyed by gains in technology sector stocks and following dovish comments from the US Fed.
• Technology company, Meta Platforms (NASDAQ: META ) skyrocketed 23.3%, after the company reported upbeat revenue in 4Q22 and announced a $40.00bn share buyback, as CEO Mark Zuckerberg called 2023 the “year of efficiency”.
• Peers, Microsoft (NASDAQ: MSFT ), Intel (NASDAQ: INTC ) and Apple (NASDAQ: AAPL ) climbed 4.7%, 3.9% and 3.7%, respectively.
• On the contrary, pharmaceutical company, Eli Lilly & Company (NYSE: LLY ) shed 3.5%, after reporting lower sales for its diabetes drug.
• Merck (NYSE: MRK ) dropped 3.3%, after the company forecasted lower than expected 2023 earnings.
• The S&P 500 index rose 1.5% to settle at 4,179.76, while the DJIA index declined 0.1% to close at 34,053.94.
• The NASDAQ index climbed 3.3% to end the trading session at 12,200.82.

Asia Market Review

• Asian markets are trading mostly higher this morning, tracking overnight gains on Wall Street.
• In Japan, consumer electronics company, Sony Group (NYSE: SONY ) has advanced 4.7%.
• On the flipside, automobile company, Mitsubishi Motors (TYO: 7211 ) has dropped 4.2%.
• In Hong Kong, insurance company, Ping An Insurance (HK: 2318 ) has shed 4.8%.
• On the other hand, real estate company, Hang Lung Properties (HK: 0101 ) has advanced 1.8%.
• In South Korea, footwear company, Hwaseung Enterprise (KS: 241590 ) has climbed 6.6%.
• On the contrary, insurance company, Meritz Fire & Marine (KS: 000060 ) Insurance has declined 5.0%.
• The Nikkei 225 index is trading 0.5% higher at 27,527.25.
• The Hang Seng index has dropped 1.9% to trade at 21,544.70, while the Kospi index is trading 0.6% higher at 2,482.96.

Commodities

• At 06:00 SAST today, Brent spot prices marginally rose to trade at $81.45/bl.
• Yesterday, Brent spot prices fell 1.0% to settle at $81.43/bl, amid rise in US crude inventories.
• Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.5% to $7.0625/bushel.
• At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,916.35/oz. Yesterday, gold declined 1.9% to close at $1,912.72/oz, as a stronger greenback dented demand for the safe haven yellow metal.
• Yesterday, copper declined 0.4% to close at $9,028.25/mt. Aluminium closed 0.5% lower at $2,583.01/mt.

Currencies

• Yesterday, the South African rand weakened against the US dollar. In the US, the number of initial jobless claims unexpectedly dropped in the week ended 27 January 2023. Moreover, factory orders rebounded in December.
• The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.98%. Further, the yield on the longer-dated 2030 issue fell to 9.47%.
• At 06:00 SAST, the US dollar is trading 0.2% higher against the South African rand at R17.0996, while the euro is trading marginally higher at R18.6281. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R20.8818.
• Yesterday, the euro mostly declined against most of the major currencies. In Germany, trade surplus narrowed less than expected in December. Separately, the European Central Bank (ECB) raised its key interest rates by 50bps and indicated one more hike of the same magnitude next month.
• At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.0895, while it has marginally weakened against the British pound to trade at GBP0.8921.

Economic Updates

• The Bank of England (BoE), in its latest policy meeting, raised its benchmark interest rate by 50bps to 4.0% in January, in line with expectations.
• In Germany, seasonally adjusted trade surplus narrowed to EUR10.00bn in December, compared to a revised surplus of EUR10.90bn recorded in the previous month.
• In the US, initial jobless claims unexpectedly declined to a level of 183.00K in the week ended 27 January 2023, compared to market expectations for a rise to a level of 200.00K. The number of initial jobless claims had recorded a level of 186.00K in the previous week.
• In the US, factory orders advanced 1.8% on a MoM basis in December, less than market expectations for a rise of 2.2%. In the previous month, factory orders recorded a revised drop of 1.9%.
• In Canada, building permits dropped 7.3% on a MoM Basis in December, more than market expectations for a drop of 5.0%. In the previous month, building permits recorded a revised advance of 14.9%.
• In Japan, the final services PMI registered a rise to a level of 52.30 in January, compared to a reading of 51.10 recorded in the prior month.
• In China, the services PMI index climbed to a level of 52.90 in January, compared to a level of 48.00 recorded in the prior month.
• In Australia, the S&P Global (NYSE: SPGI ) services PMI recorded a rise to a level of 48.60 in January, more than market expectations for a rise to a level of 48.30. The services PMI had recorded a level of 47.30 in the previous month.
• In New Zealand, the ANZ consumer confidence registered a rise to a level of 83.40 in January. In the previous month, consumer confidence had registered a level of 73.80.

Corporate Updates

South Africa

• Anglo American Plc (JO: AGLJ ): The mining company, in its 4Q22 production report, revealed that its production increased by 10.0% compared with the corresponding previous year. Moreover, its copper production increased by 52.0%, due to the ramp-up of production from its new Quellaveco copper mine in Peru. Also, rough diamond production increased by 6.0%. Furthermore, its steelmaking coal and iron ore production advanced by 6.0% and 4.0%, respectively. Meanwhile, its nickel production decreased by 4.0%, primarily due to planned annual maintenance.
• Kumba Iron Ore: The mining company, in its FY22 production and sales update, revealed that its production decreased by 8.0% from the previous year to 37.7 Mt due to operational headwinds at Kolomela as well as rail constraints, including industrial action at Transnet. Furthermore, its sales decreased by 9.0% to 36.6 Mt.
• RCL Foods Limited (JO: RCLJ ): The food company, in its trading update for the six months ended December 2022, revealed that it expects HEPS to be 26.8% and 20.1%, lower between 53.20c and 58.10c compared with 72.70c recorded in the previous year. Moreover, it expects its EPS to be 26.3% and 20.1%, lower as compared with 73.80c recorded in the previous year.
• Super Group Limited (JO: SPGJ ): The supply chain management company, in its interim period ending 31 December 2022 trading and operational update, revealed that it expects revenue to be 30.0% and 40.0%, higher between R28.10bn and R30.30bn compared with R21.60bn recorded in the corresponding previous year. Moreover, it expects its EPS to be 25.0% and 35.0%, higher between 237.70c and 256.80c, compared with 190.20c recorded in the same period of the previous year. Also, it expects HEPS to be 25.0% and 35.0%, higher between as compared with 190.90c recorded in the same previous year.
• Raymond Ndlovu steps down as CEO of Remgro (JO: REMJ ) telecom unit CIVH: Raymond Ndlovu, CEO of Remgro’s telecom business Community Investment Ventures Holdings (CIVH), will step down “to pursue other business interests” with effect from April 1, the group said.
• Kumba warns profit will plunge by more than a third: Kumba Iron Ore expects headline profit to drop by as much as 44.0% in the year ended December as the result of lower iron ore prices and lower sales, though its shares rallied after an initial jolt.