SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red yesterday, dragged down by losses in the mining sector stocks.
- Merafe Resources, Pan African Resources (JO:PANJ) and African Rainbow Minerals (JO:ARIJ) plunged 6.5%, 6.0% and 3.6%, respectively.
- Insurance company, Discovery plummeted 7.8%, after it waived its dividend due to uncertainty created by the Covid-19 pandemic, and also flagged a possible capital raise to help fund its Chinese business.
- Banking firms, Capitec Bank Holdings (JO:CPIJ), RMB Holdings (JO:RMHJ) and Absa (JO:ABGJ) Group shed 1.3%, 0.7% and 0.6%, respectively.
- On the flipside, Aspen (JO:APNJ) Pharmacare Holdings gained 4.9%, after the company indicated that it would reinstate dividends after cutting debt.
- The JSE All Share index declined 0.5% to close at 66,654.24.
- The UK market finished firmer yesterday, buoyed by robust earnings report.
- Melrose surged 7.2%, after the company reported 1H21 profits, following a rebound in its aerospace division.
- Insurance sector firms, Prudential (LON:PRU), Legal & General Group and Admiral Group (LON:ADML) rose 3.8%, 1.4% and 0.6%, respectively.
- Mining sector stocks, Glencore (LON:GLEN), Rio Tinto (LON:RIO) and Antofagasta (LON:ANTO) advanced 2.2%, 1.4% and 1.0%, respectively.
- On the flipside, Barratt Developments (LON:BDEV) shed 4.5%, even after the company reported FY21 profits amid strong demand.
- Retail sector stocks, Next and Kingfisher (LON:KGF) shed 1.9% and 1.4%, respectively.
- The FTSE 100 index advanced 0.2% to close at 7,163.90.
US MARKET REVIEW
- US markets ended higher yesterday, as investors mulled over improvement in the job market.
- Baxter International (NYSE:BAX) advanced 4.8%, after it announced that it has entered an agreement to purchase Hill-Rom Holdings, for a consideration of $156.00 per share, with an enterprise value of about $12.40bn.
- On the flipside, Hormel Foods (NYSE:HRL) shed 4.6%, after cutting its FY21 earnings guidance, despite reporting 3Q21 profits that matched expectations, amid inflationary pressure and labour force shortages.
- Facebook (NASDAQ:FB) declined 1.8%, after Ireland’s Data Protection Commission fined its WhatsApp for breach of data protection rules.
- The S&P 500 index rose 0.3% to settle at 4,536.95, while the DJIA index advanced 0.4% to close at 35,443.82.
- The NASDAQ index climbed 0.1% to end the trading session at 15,331.18.
ASIA MARKET REVIEW
- Asian markets are trading mostly higher this morning, mirroring overnight gains from US equities.
- Meanwhile, in Japan, Prime Minister, Yoshihide Suga, won’t run for governing party leadership election.
- In equity markets, steel manufacturing company, Nippon Steel (T:5401) has advanced 3.7%.
- On the flipside, chemicals company, Nissan Chemical. (T:4021) has shed 0.8%.
- In Hong Kong, Alibaba (NYSE:BABA) Group Holdings has dropped 2.5%, on the back of news that it will invest $15.50bn for common prosperity by 2025.
- In South Korea, LG Electronics (KS:066570) has advanced 4.7%.
- On the downside, automobile manufacturing company, SsangYong Motor (KS:003620) has plummeted 19.2%.
- The Nikkei 225 index is trading 1.5%, higher at 28,981.54.
- The Hang Seng index has declined 0.6% to trade at 25,935.72, while the Kospi index is trading 0.7%, higher at 3,198.61.
COMMODITIES
- At 06:00 SAST today, Brent spot prices rose 0.2% to trade at $72.94/bl, reversing previous session gains.
- Yesterday, Brent spot prices rose 2.3% to settle at $72.76/bl, amid optimism about global economic rebound after a decline in the oil inventories. Oil and gas companies stressed to get offshore operations up and in succession after Hurricane Ida, and after President Joe Biden authorized a release of emergency fuel stocks as the extent of the damages by the storm became more apparent.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.5% to $5.245/bushel.
- At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,813.57/oz. Yesterday, gold declined 0.2% to close at $1,809.66/oz, as investors awaited the release of non-farm payrolls as they look for the US Federal Reserve’s tapering strategy.
- Yesterday, copper rose 0.3% to close at $9,364.26/mt. Aluminium closed 0.3% lower at $2,688.00/mt.
CURRENCIES
- Yesterday, the South African rand weakened against the US dollar. In the US, new claims for jobless benefits fell for the week ended 27 August, while layoffs dropped to the lowest levels in more than 24 years in August, indicating an improvement in the labour market despite a surge in the coronavirus infection. Nonfarm productivity increased less than expected in 2Q21. Unit labour grew more than expected in 2Q21. Unit labour costs have been inaccurate by the pandemic’s uneven impact on lower-wage industries. In the US, new orders rose in July, led by rise in orders for primary metals and machinery, while business spending on equipment remained strong, indicating improvement in manufacturing.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.28%. Further, the yield on 2023 bond increased to 4.87% while that for the longer-dated 2030 issue fell to 8.75%.
- At 06:00 SAST, the US dollar is trading 0.3% lower against the South African rand at R14.4222, while the EUR/ZAR is trading 0.3% lower at R17.1329. At 06:00 SAST, the British pound has declined 0.3% against the South African rand to trade at R19.9565.
- Yesterday, the euro advanced against most of the major currencies. In the eurozone, Producer Price Index (PPI) advanced more than expected in July, with an increase prices of energy and intermediate goods.
- At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.1880, while it has marginally gained against the British pound to trade at GBP0.8585.
ECONOMIC UPDATES
- In Switzerland, the consumer price index (CPI) registered a rise of 0.2% in August on a monthly basis, higher than market expectations of a rise of 0.1%. In the previous month, the CPI had fallen 0.1%.
- In 2Q 2021, the seasonally adjusted gross domestic product (GDP) in Switzerland recorded a rise of 1.8% on a QoQ basis, less than market expectations for an advance of 2.0%. In the previous quarter, GDP had dropped by a revised 0.4%.
- In Spain, number of people unemployed recorded a drop of 82.60K in August. Spain had recorded a fall of 197.80K jobs in the prior month.
- In July, on a monthly basis, the PPI recorded a rise of 2.3% in the eurozone, compared with a rise of 1.4% in the previous month. Markets were anticipating the PPI to climb 1.1%.
- The trade deficit in the US dropped to $70.05bn, in July, compared with a trade deficit of $73.23bn in the previous month. Market expectations were for the nation to record a trade deficit of $71.00bn.
- In 2Q 2021, the final unit labour costs in non-farm businesses recorded a rise of 1.3% in the US on a QoQ basis, higher than market expectations of an advance of 0.9%. In the prior quarter, the unit labour costs in non-farm businesses had recorded a revised drop of 2.8%. The preliminary figures had indicated an advance of 1.0%.
- In 2Q 2021, on a QoQ basis, the final non-farm business productivity climbed 2.1% in the US, lower than market expectations of a rise of 2.4%. The preliminary figures had indicated a rise of 2.3%. The non-farm business productivity had advanced by a revised 4.3% in the prior quarter.
- The number of initial jobless claims in the US dropped to 340.00 K in the week ended 28 August 2021, compared with a revised level of 354.00 K in the previous week. Markets were anticipating the seasonally adjusted number of initial jobless claims to fall to a level of 345.00 K.
- In the US, factory orders climbed 0.4% on a MoM basis in July, higher than market expectations of a rise of 0.3%. In the previous month, factory orders had recorded a rise of 1.5%.
- On a MoM basis, the final durable goods orders eased 0.1% in the US, in July. Durable goods orders had risen 0.8% in the prior month. The preliminary figures had also recorded a drop of 0.1%.
- The final durable goods orders (ex-transportation) climbed 0.8% on a MoM basis in the US, in July. In the prior month, durable goods orders (ex-transportation) had advanced by a revised 0.6%. The preliminary figures had indicated an advance of 0.7%.
- Building permits in Canada fell 3.9% in July on a monthly basis, compared with market expectations of a rise of 0.3%. Building permits had registered a revised rise of 7.2% in the previous month.
- The final Nikkei Japan services PMI recorded a drop to 42.90 in Japan, in August. Nikkei Japan services PMI had registered a reading of 47.40 in the prior month. The preliminary figures had recorded a fall to 43.50.
- The Caixin/Markit services PMI index in China registered a drop to 46.70 in August. The Caixin/Markit services PMI index had registered a reading of 54.90 in the previous month.
CORPORATE UPDATES
SOUTH AFRICA
- Firstrand Limited: The bank holding company, in its FY21 trading statement, indicated that it expects its EPS to be between 461.30c and 479.50c, higher as compared with a 303.50c in the prior year. It expects its HEPS to be between 469.50c and 488.10c, higher as compared with 308.90c in the previous year.
- Sanlam (JO:SLMJ) Limited: The insurance company, in its 1H21 trading statement, revealed that it expects its expects its diluted EPS to be between 168.40c and 185.20c, higher as compared with a diluted loss per share of 168.40c in the corresponding previous year. It expects its HEPS to be between 188.50c and 207.40c, higher as compared with 188.50c in the corresponding previous year.
- Gold Fields (JO:GFIJ) Limited: The gold mining company announced the appointment of Mr. Yunus Suleman as the new Chair of the Board of the company with effect from the 2022 Annual General Meeting, scheduled for 1 June 2022. Mr Suleman will succeed Ms Cheryl Carolus, who will step down at the 2022 AGM, after 7 years as Chair of the company. Further, it announced that Mr. Steve Reid had been elected Lead Independent Director of the Board with immediate effect.
- Impala Platinum Holdings Limited (JO:IMPJ): The platinum mining company, in its FY21 results, indicated that its revenue rose to R129.58bn from R69.85bn posted in the previous year. Its basic EPS increased from the prior year to R59.96.
- Discovery Limited (JO:DSBPp): The financial services company, in its FY21 results, stated that its net insurance premium revenue increased to R47.38bn from R43.47bn, posted in the previous year. Its diluted EPS rose from the same period of the prior year to R4.75.
- Pick n Pay (JO:PIKJ) Stores Limited: The retail company, announced that Ms Suzanne Ackerman-Berman will be taking early retirement from her position as Transformation Director of the company with effect from 31 March 2022. She will continue to serve the company on the Board of directors in a non-executive capacity.
- Santam (JO:SNTJ) Limited: The financial services company, in its 1H21 results, reported that its gross written premium advanced 9.9% from the same period of the preceding year to R20.07bn. Its diluted EPS stood at R8.59, compared with R0.23, recorded in the corresponding period of the previous year.
- Truworths International Limited (JO:TRUJ): The investment holding company, in its FY21 results, indicated that its revenue fell to R17.53bn from R17.98bn posted in the previous year. Its diluted EPS increased from the same period of the prior year to R4.76.
- Fortress REIT Limited: The real estate investment trust company, in its FY21 results, stated that its net insurance premium revenue decreased to R3.23bn from R3.62bn, posted in the corresponding period of the previous year. Its diluted EPS per A share rose from the same period of the prior year to R1.56.
- Super Group Limited: The supply chain management company, announced SG Fleet’s successful completion of the LeasePlan ANZ acquisition from LeasePlan Corporation N.V. for a cash consideration of A$273.00mn and a 13.0% equity interest in SG Fleet.
- Grindrod Shipping Holdings Limited: The logistics company, announced the acquisition of the remaining 31.1% equity stake in its IVS Bulk joint venture and concurrent redemption of the IVS Bulk preference shares were concluded on September 1, 2021. The company elected to close on the acquisition utilizing cash on hand but still intends to complete the $23.00mn upsizing of one of its exiting IVS Bulk credit facilities by September 30, 2021 to replace the working capital used to fund the transaction. The company has received credit committee approval from its lenders and is in the process of completing definitive documentation, although there is no assurance that the financing will be completed as contemplated.
- Steinhoff (JO:SNHJ) settlement favours debtholders at expense of creditors, court hears: Creditors who lost billions in the country’s biggest accounting scandal will get very little if Steinhoff isn’t liquidated, while lenders who bought debt after the fraud was exposed will make considerable profits when they are repaid in 2023.
- The sky is the limit for Implats as it posts record results: After posting record results for the year-ended in June, Impala Platinum expects the good times to continue to roll as demand for platinum remains strong, bolstered by a recovering global automotive industry.