Market Review, Corporate Updates, Commodities & Currencies - 05.07.21

  • Market Overview
  • Editor's Pick

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red on Friday, pulled down by losses in financial services and mining sector stocks and as the Delta strain of COVID-19 raised concerns about domestic economic recovery.
  • Financial services companies, Alexander Forbes Group Holdings (JO: AFHJ ) and Lib Hold (JO: LBHJ ) declined 3.2% and 0.9%, respectively.
  • Gold mining stocks, Sibanye-Stillwater, Harmony Gold Mining and AngloGold Ashanti (JO: ANGJ ) dropped 2.4%, 2.0% and 0.1%, respectively.
  • Platinum mining firms, Northam (JO: NHMJ ) Platinum, Impala Platinum (JO: IMPJ ) Holdings and Anglo American Platinum (JO: AMSJ ) shed 1.3%, 1.3% and 0.7%, respectively.
  • On the flipside, real estate property stocks, Accelerate Property Fund Ltd (JO: APFJ ) and Capital & Counties Properties (JO: CCOJ ) rose 3.0% and 1.4%, respectively.
  • The JSE All Share index declined 0.3% to close at 66,323.76.

UK MARKET REVIEW

  • The UK market finished weaker on Friday, pulled down by losses in banking and energy sector stocks.
  • Banking companies, Standard Chartered (LON: STAN ), NatWest Group (LON: NWG ) and Lloyds Banking Group (LON: LLOY ) shed 2.4%, 2.2% and 1.7%, respectively.
  • Oil companies, BP (LON: BP ) and Royal Dutch Shell (LON: RDSa ) dropped 1.0% and 0.8%, respectively.
  • Financial services companies, Schroders (LON: SDR ) and Scottish Mortgage Investment Trust (LON: SMT ) declined 1.3% and 0.6%, respectively.
  • On the other hand, miners, Anglo American, Glencore (LON: GLEN ) and Fresnillo (LON: FRES ) rose 2.0%, 1.5% and 1.2%, respectively.
  • JD Sports Fashion (LON: JD ) gained 1.7%.
  • Meanwhile, the retailer’s remuneration committee chairperson, Andrew Leslie lost the re-election bid, amid indignation over the pay policy, thus making him step down from the board.
  • The FTSE 100 index declined marginally to close at 7,123.27.

US MARKET REVIEW

  • US markets ended higher on Friday, buoyed by the release of better-than-expected domestic jobs data in June.
  • Microsoft (NASDAQ: MSFT ), Apple (NASDAQ: AAPL ) and Intel (NASDAQ: INTC ) advanced 2.2%, 2.0% and 1.3%, respectively.
  • Financial services companies, Visa (NYSE: V ) and American Express (NYSE: AXP ) rose 1.5% and 0.9%, respectively.
  • Pharmaceutical companies, Johnson & Johnson (NYSE: JNJ ), Merck & Company Inc (NYSE: MRK ) and GlaxoSmithKline (LON: GSK ) gained 1.8%, 0.8% and 0.6%, respectively.
  • On the contrary, International Business Machines (NYSE: IBM ) shed 4.6%, after Jim Whitehurst stepped down as the President of the company.
  • Boeing (NYSE: BA ) shed 1.3%, after its cargo plane made an emergency landing in the Pacific Ocean, rescuing both the people on board.
  • The S&P 500 index rose 0.8% to settle at 4,352.34, while the DJIA index advanced 0.4% to close at 34,786.35.
  • The NASDAQ index climbed 0.8% to end the trading session at 14,639.33.

ASIA MARKET REVIEW

  • Asian markets are trading mostly lower this morning.
  • In Japan, Softbank Group (T: 9984 ) has plunged 5.1%, after Chinese regulators claimed that the company-backed Didi illegally collected users’ personal data; ordering app stores to stop offering Didi’s app.
  • In Hong Kong, market heavyweight, Tencent Holdings (HK: 0700 ) has dropped 2.3%.
  • In South Korea, technology company, LG Electronics (KS: 066570 ) has gained 0.6%.
  • Meanwhile, automobile manufacturer, Ssangyong Motor (KS: 003620 ) has plummeted 19.3%.
  • The Nikkei 225 index is trading 0.6% lower at 28,623.93.
  • The Hang Seng index is trading 0.5% weaker at 28,163.83, while the Kospi index is trading 0.4% higher at 3,294.92.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices rose 0.2% to trade at $76.58/bl, extending the previous session’s gains.
  • On Friday, Brent spot prices rose 0.3% to settle at $76.40/bl, amid continued talks by the OPEC+ on raising crude oil output, after the United Arab Emirates thwarted a deal, as the country wants its baseline production to be higher, thus causing further delays to plans on increasing oil output. Meanwhile, Baker Hughes reported that the number of active US oil drilling rigs rose by 4 to 376 for the week ended 2 July.
  • On Friday, the Illinois North Central No.2 Yellow corn spot prices fell 2.3% to $6.76/bushel.
  • At 06:00 SAST today, gold prices marginally advanced to trade at $1,787.96/oz. On Friday, gold gained 0.6% to close at $1,787.30/oz, as concerns over the Delta variant of COVID-19 gave a boost to the precious metal.
  • On Friday, copper rose 0.6% to close at $9,350.52/mt. Aluminium closed 2.0% higher at $2,546.25/mt.

CURRENCIES

  • On Friday, the South African rand strengthened against the US dollar. In the US, non-farm payrolls reported robust growth, with companies offering incentives and raised wages to attract unemployed labour force, in order to increase their production and services to meet the growing demand. Factory orders boosted on a monthly basis in May with increased spending on equipment despite supply constraints. On the contrary, the US trade deficit widened in May to the second largest on record as imports increased faster than exports.
  • The yield on benchmark government bonds mostly fell on Friday. The yield on 2026 bond fell to 7.52%. Further, the yield on 2023 bond advanced to 5.33%, while that for the longer-dated 2030 issue fell to 8.92%.
  • At 06:00 SAST, the US dollar is trading marginally lower against the South African rand at R14.2469, while the euro is trading 0.1% lower at R16.8900. At 06:00 SAST, the British pound has declined 0.2% against the South African rand to trade at R19.6973.
  • On Friday, the euro declined against most of the major currencies, after the European Central Bank (ECB) President, Christine Lagarde stated that the economy is recovering from the pandemic effect, but this recovery is fragile. The eurozone’s producer price index (PPI) rose more than expected in May both on an annual and monthly basis.
  • At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1854, while it has weakened 0.1% against the British pound to trade at GBP0.8575.

ECONOMIC UPDATES

  • The PPI registered a rise of 9.6% in the eurozone on an annual basis in May, compared with a rise of 7.6% in the prior month. Markets were anticipating the PPI to advance 9.5%.
  • In June, unemployment rate advanced unexpectedly to a level of 5.9% in the US. Unemployment rate had recorded a level of 5.8% in the previous month.
  • Non-farm payrolls climbed by 850.00K in the US, in June, higher than market expectations of an advance of 700.00K jobs. The US had recorded a revised increase of 583.00K jobs in the previous month.
  • In May, trade deficit in the US widened to $71.20bn, compared with market expectations of a trade deficit of $71.40bn. The US had posted a trade deficit of $69.10bn in the previous month.
  • The labour force participation rate in the US remained steady at 61.6% in June. The labour force participation rate had registered a similar reading of 61.6% in the prior month.
  • In June, average hourly earnings of all employees advanced 3.6% on an annual basis in the US, less than market expectations for a rise of 3.7%. In the previous month, average hourly earnings of all employees had recorded a revised rise of 1.9%.
  • In the US, factory orders advanced 1.7% in May on a monthly basis, higher than market expectations of an advance of 1.6%. In the previous month, factory orders had recorded a revised drop of 0.1%.
  • In Canada, the manufacturing PMI dropped to 56.50 in June, compared with a reading of 57.00 in the previous month.
  • The final Nikkei Japan services PMI advanced to 48.00 in June, in Japan, compared with a level of 46.50 in the previous month. The preliminary figures had recorded an advance to 47.20.
  • In June, the Caixin/Markit services PMI index dropped to 50.30 in China. The Caixin/Markit services PMI index had recorded a level of 55.10 in the previous month.

CORPORATE UPDATES

SOUTH AFRICA

  • Wescoal (JO: WSLJ ) signs on technology to boost volumes and green operations: Wescoal has signed a deal that will result in the adoption of sorting technology to upgrade the junior miner’s coal quality, ultimately increasing sales volumes cleaning up its environmental footprint too.

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