South Africa Market Review
- South African markets closed in the red yesterday, pulled down by losses in technology sector stocks.
- Naspers (JO:NPNJn) plunged 7.0%, amid worries about how China’s determined crackdown on tech companies will affect the online entertainment industry.
- Real estate companies, Delta Property Fund (JO:DLTJ), Capital & Counties Properties (JO:CCOJ) and Dipula Income Fund (JO:DIBJ) shed 4.8%, 2.9% and 1.8%, respectively.
- On the flipside, banking sector stocks, Capitec Bank Holdings (JO:CPIJ), Absa Group (JO:ABGJ) and FirstRand (JO:FSRJ) advanced 2.8%, 1.9% and 1.6%, respectively.
- Mining sector stocks, Anglo American (JO:AMSJ), Kumba (JO:KIOJ) and Exxaro Resources (JO:EXXJ) rose 2.2%, 1.5% and 0.5%, respectively.
- The JSE All Share index declined 0.2% to close at 68,705.73.
- The UK market finished firmer yesterday, buoyed by robust earnings releases, thus upholding hopes of a faster domestic economic rebound.
- BP (LON:BP) surged 5.6%, after the oil company announced its plans to buy back $1.00bn shares every quarter and thereby increase its dividend by the next 5 years, after the company reported a surge in its 2Q21 profits.
- Banking company, Standard Chartered (LON:STAN) rose 1.0%, after announcing a $250.00mn share buyback and an interim dividend of 3.00c, after reporting an increase in 1H21 pre-tax profits.
- On the flipside, Smiths Group (LON:SMIN) plummeted 10.0%, after the company announced its agreement to sell its medical unit to TA Associates for a consideration of $2.30bn.
- The FTSE 100 index advanced 0.3% to close at 7,105.72.
US Market Review
- US markets ended higher yesterday, buoyed by upbeat corporate earnings reports.
- Under Armour (NYSE:UAA) surged 7.5%, after the company reported robust 2Q21 earnings and lifted its FY21 guidance. Simon Property Group (NYSE:SPG) advanced 2.6%, after the company raised its FY21 net income guidance.
- On the other hand, Clorox (NYSE:CLX) plunged 9.5%, amid reporting lower than expected 4Q21 earnings and estimating a further decline in its earnings and margin in FY22.
- Take-Two (NASDAQ:TTWO) Interactive plummeted 7.7%, after the company posted a less than the estimated profit guidance for 2Q22.
- The S&P 500 index rose 0.8% to settle at 4,423.15, while the DJIA index advanced 0.8% to close at 35,116.40.
- The NASDAQ index climbed 0.5% to end the trading session at 14,761.29.
Asia Market Review
- Asian markets are trading mostly higher this morning, tracking overnight gains on Wall Street.
- In China, service activity accelerated in July. In Japan, tractor and heavy equipment manufacturer, Kubota (T:6326) has shed 4.2%.
- On the contrary, electronics company, Casio Computer (T:6952) has surged 7.1%.
- In Hong Kong, Sunny Optical Technology Group (HK:2382) has jumped 5.9%.
- On the other hand, food company, WH Group (HK:0288) has shed 2.0%. In South Korea, LG Electronics (KS:066570) has added 1.6%. On the flipside, mould manufacturing company, Sewon Precision Industry (KS:021820) has shed 4.2%.
- The Nikkei 225 index is trading 0.2% lower at 27,590.08.
- The Hang Seng index is trading 1.6% higher at 26,625.74, while the Kospi index is trading 1.2% higher at 3,274.62.
Commodities
- At 06:00 SAST today, Brent spot prices rose 0.3% to trade at $72.51/bl, reversing the previous session’s losses.
- Yesterday, Brent spot prices fell 1.5% to settle at $72.27/bl. Meanwhile, the American Petroleum Institute reported that crude oil inventories declined by 879,000bls for the week ended 30 July. President of Iran, Ebrahim Raisi, revealed that the government would try to lift "tyrannical" sanctions that are imposed by the US on its energy and banking sectors. Further, oil tanker in the Gulf off the coast of the UAE, is alleged to have been detained by Iranian-backed forces.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 1.3% to $6.08/bushel.
- At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,814.54/oz. Yesterday, gold declined 0.2% to close at $1,810.44/oz, as investors awaited release of the US jobs data that might impact the US Federal Reserve’s (Fed) decision on its asset purchase programme.
- Yesterday, copper declined 1.6% to close at $9,521.50/mt. Aluminium closed 1.2% lower at $2,582.15/mt.
Currencies
- Yesterday, the South African rand strengthened against the US dollar. In the US, factory orders accelerated more than expected in June, as spending on equipment increased indicating towards strength in the manufacturing sector, despite a shift of demand to services. Meanwhile, Fed Governor, Michelle Bowman stated that labour market will take time to rebound from the pandemic hit and a lot needs to be done for the economy to recover fully and get back on track.
- The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.29%. Further, the yield on 2023 bond advanced to 4.94%, while that for the longer-dated 2030 issue rose to 8.79%.
- At 06:00 SAST, the US dollar is trading 0.2% lower against the South African rand at R14.2883, while the euro is trading 0.1% lower at R16.9656. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R19.9046.
- Yesterday, the euro declined against most of the major currencies. The eurozone producer price index (PPI) accelerated in June, driven by a further surge in energy prices.
- At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1873, while it has marginally weakened against the British pound to trade at GBP0.8524.
Economic Updates
- In June, on a MoM basis, the PPI advanced 1.4% in the eurozone, meeting market expectations of an advance of 1.4%. In the prior month, the PPI had advanced 1.3%.
- In June, factory orders in the US recorded a rise of 1.5% on a MoM basis, more than market expectations for a rise of 1.0%. In the previous month, factory orders had advanced by a revised 2.3%.
- The economic optimism index dropped to 53.60 in August, in the US, compared with a level of 54.30 in the previous month.
- In June, on a monthly basis, the final durable goods orders in the US advanced 0.9%. Durable goods orders had climbed by a revised 3.2% in the previous month. The preliminary figures had indicated a rise of 0.8%.
- The manufacturing PMI registered a drop to 56.20 in Canada, in July. The manufacturing PMI had registered a level of 56.50 in the previous month.
- The Fed Governor, Michelle Bowman stated that labour market will take time to rebound from the pandemic hit and a lot needs to be done for the economy to recover fully and get back on track.
- In New Zealand, the number of people employed recorded a rise of 1.0% in 2Q21 on a QoQ basis, more than market expectations for an advance of 0.7%. In the previous quarter, the number of people employed had risen 0.6%.
- The labour cost index rose 0.9% in New Zealand on a QoQ basis, in 2Q21. The labor cost index had registered a rise of 0.4% in the previous quarter.
- In New Zealand, the participation rate recorded a rise to 70.5% in 2Q21, lower than market expectations of an advance to a level of 70.6%. In the previous quarter, the participation rate had registered a level of 70.4%.
- The unemployment rate dropped to 4.0% in 2Q21, in New Zealand, compared with a revised level of 4.6% in the prior quarter. Markets were expecting the unemployment rate to drop to a level of 4.5%.
Corporate Updates
South Africa
- Royal Bafokeng Platinum Limited (JO:RBPCBe): The platinum mining company, in its 1H21 results, indicated that its revenue rose to R9.58bn from R4.61bn posted in the corresponding period of the previous year. Its diluted EPS increased as compared with the same period of the prior year to R18.00.
- Curro Holdings Limited (JO:COHJ): The independent schools and education services company, in its 1H21 trading statement, reported that its revenue advanced 12.0%, compared with the same period of the preceding year. Its EPS is expected to be between 20.00c to 23.50c compared with the 22.00c recorded in the same period of the prior year.
- M&R (JO:MURJ) secures contracts worth R1.20bn: Engineering group Murray & Roberts’ (M&R’s) mining platform has been awarded two contracts worth R1.20bn for work in the US and Canada.
- Curro dips as it flags a plunge in first-half profits: Curro’s share price fell as much as 9.4%, the most in six months, after SA’s biggest private school group said first-half headline earnings would drop up to 52.5%.
- MTN Nigeria (LAGOS:MTNN) (JO:MTNJ) rejigs airtime pricing as dispute with banks resolved: MTN Nigeria has implemented a new pricing framework for airtime purchases through banks in a bid to resuscitate a lucrative payment service disrupted by a dispute with lenders in Africa’s largest economy.