Market Review, Corporate Updates, Commodities & Currencies - 06.10.21

  • Market Overview

South Africa Market Review

  • South African markets closed in the green yesterday, following broad-based gains in retail and healthcare sector stocks.
  • Retail companies, Mr Price Group (JO: MRPJ ), Cashbuild (JO: CSBJ ) and Massmart Holdings (JO: MSMJ ) rose 2.8%, 2.1% and 1.4%, respectively.
  • Pharmaceutical companies, Netcare (JO: NTCJ ), Life Healthcare Group Holdings (JO: LHCJ ) and Mediclinic International (LON: MDCM ) added 1.9%, 1.5% and 0.9%, respectively.
  • On the flipside, gold mining companies, Gold Fields (JO: GFIJ ), Harmony Gold Mining (JO: HARJ ) and AngloGold Ashanti (JO: ANGJ ) shed 2.3%, 1.2% and 1.1%, respectively.
  • Banks, FirstRand (JO: FSRJ ) and Absa Group (JO: ABGJ ) dropped 1.3% and 0.8%, respectively.
  • Real estate property sector stocks, Growthpoint Properties (JO: GRTJ ) and Fortress REIT declined 0.9% and 0.6%, respectively.
  • However, peer, Delta Property Fund (JO: DLTJ ) advanced 4.9%.
  • The JSE All Share index advanced 0.6% to close at 64,542.87.

UK Market Review

  • The UK market finished firmer yesterday, buoyed by gains in banking and energy sector stocks.
  • Banking firms, Barclays (LON: BARC ), Lloyds Banking Group (LON: LLOY ) and Standard Chartered (LON: STAN ) rose 3.9%, 3.8% and 3.1%, respectively.
  • Oil and energy companies, BP (LON: BP ) and Royal Dutch Shell (LON: RDSa ) advanced 1.8% and 1.6%, respectively.
  • On the flipside, pharmaceuticals company, Hikma Pharmaceuticals (LON: HIK ) shed 2.9%. Consumer goods companies, Reckitt Benckiser Group (LON: PSN ) and Unilever (LON: ULVR ) eased 1.5% and 0.8%, respectively.
  • Property development companies, Berkeley Group Holdings (LON: BKGH ) and Barratt Developments (LON: BDEV ) declined 1.1% and 0.9%, respectively.
  • Travel and leisure company, International Consolidated Airlines Group SA (LON: ICAG ) dropped 0.8%.
  • Tobacco company, British American Tobacco (JO: SNHJ ) lost 0.7%.
  • The FTSE 100 index advanced 0.9% to close at 7,077.10.

US Market Review

  • US markets ended higher yesterday, following the release of robust domestic service sector data.
  • Beverage company, PepsiCo (NASDAQ: PEP ) rose 0.6%, after the company reported better than expected 3Q21 profits and revenue and raised its earnings outlook for FY21.
  • Johnson & Johnson (NYSE: JNJ ) added 0.2%, after the company announced that it has submitted an amendment to the emergency use authorization it’s requesting from the US Food and Drug Administration for a booster shot of its COVID-19 vaccine.
  • Technology companies, Microsoft (NASDAQ: MSFT ), Apple (NASDAQ: AAPL ) and salesforce.com (NYSE: CRM ) advanced 2.0%, 1.4% and 0.3%, respectively.
  • The S&P 500 index rose 1.1% to settle at 4,345.72, while the DJIA index advanced 0.9% to close at 34,314.67.
  • The NASDAQ index climbed 1.3% to end the trading session at 14,433.83.

Asia Market Review

  • Asian markets are trading lower this morning, despite overnight gains on Wall Street.
  • In Japan, automotive manufacturer, Mitsubishi Motors (T: 7211 ) has plunged 7.6%. On the contrary, glass manufacturer, Nippon Electric Glass (T: 5214 ) has advanced 4.4%.
  • In Hong Kong, pharmaceutical company, Sino Biopharmaceutical (HK: 1177 ) has plummeted 5.1%.
  • On the flipside, banking company, HSBC Holdings (LON: HSBA ) has added 2.0%.
  • In South Korea, technology company, LG Electronics (KS: 066570 ) has shed 2.0%.
  • On the flipside, chemical company, Foosung (KS: 093370 ) has surged 5.5%.
  • The Nikkei 225 index is trading 1.6% lower at 27,379.47.
  • The Hang Seng index has declined 0.8% to trade at 23,917.94, while the Kospi index is trading 1.0% lower at 2,933.11.

Commodities

  • At 06:00 SAST today, Brent spot prices fell 0.3% to trade at $82.85/bl, reversing the previous session’s gains.
  • Yesterday, Brent spot prices rose 1.7% to settle at $83.12/bl, following OPEC+’s decision to maintain its current output policy. Meanwhile, the American Petroleum Institute (API) reported that crude oil inventories rose by 0.95mn bls for the week ended 1 October.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.6% to $5.00/bushel.
  • At 06:00 SAST today, gold prices declined 0.3% to trade at $1,755.70/oz. Yesterday, gold declined 0.5% to close at $1,760.18/oz, as strength in the greenback dampened demand for the safe haven yellow metal.
  • Yesterday, copper declined 0.9% to close at $9,177.00/mt. Aluminium closed 0.3% higher at $2,904.50/mt.

Currencies

  • Yesterday, the South African rand strengthened against the US dollar. In the US, the service industry activity rose in September, despite being restrained by a continuing shortage of inputs, labour and the resulting high prices. Meanwhile, a separate report from the Commerce Department indicated that US trade deficit surged 4.2% to a record $73.30bn in August.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.78%. Further, the yield on 2023 bond advanced to 5.16%, while that for the longer-dated 2030 issue rose to 9.48%.
  • At 06:00 SAST, the US dollar is trading 0.4% higher against the South African rand at R15.0567, while the euro is trading 0.3% higher at R17.4560. At 06:00 SAST, the British pound has gained 0.3% against the South African rand to trade at R20.4990.
  • Yesterday, the euro declined against most of the major currencies. In Germany, service sector activity continued to expand strongly in September, but the pace of recovery slowed with companies being affected by supply bottlenecks. Business growth in the eurozone remained strong in September but rising inflationary pressures put a dent in demand while the supply bottlenecks constrained activity. Also, in the eurozone, the producer price index (PPI) dropped more than expected in September. Meanwhile, the European Central Bank (ECB) President, Christine Lagarde stated that the ECB is closely observing inflation expectations and wage developments.
  • At 06:00 SAST, the euro marginally slipped against the US dollar to trade at $1.1594, while it has gained 0.1% against the British pound to trade at GBP0.8516.

Economic Updates

  • The final services PMI advanced unexpectedly to 55.40 in September, in UK. In the previous month, the services PMI had registered a reading of 55.00. The preliminary figures had indicated a fall to 54.60.
  • In Spain, the services PMI fell to a level of 56.90 in September, compared with a level of 60.10 in the prior month. Market anticipations were for the services PMI to fall to a level of 58.10.
  • In Italy, the services PMI eased to 55.50 in September, more than market expectations for a fall to a level of 56.50. In the previous month, the services PMI had recorded a reading of 58.00.
  • Industrial production in France recorded a rise of 1.0% on a MoM basis in August, higher than market expectations of an advance of 0.4%. In the previous month, industrial production had recorded a revised rise of 0.5%.
  • Manufacturing production climbed 1.1% in France on a monthly basis, in August. Manufacturing production had risen by a revised 0.7% in the prior month.
  • The final services PMI in France recorded a drop to 56.20 in September, lower than market expectations of a drop to a level of 56.00. Services PMI had recorded a level of 56.30 in the prior month. The preliminary figures had indicated a fall to 56.00.
  • The final services PMI in Germany recorded a drop to 56.20 in September, compared with a reading of 60.80 in the previous month. Markets were anticipating services PMI to drop to a level of 56.00. The preliminary figures had recorded a drop to 56.00.
  • The final services PMI in the eurozone eased to 56.40 in September, lower than market expectations of a drop to a level of 56.30. Services PMI had recorded a level of 59.00 in the previous month. The preliminary figures had indicated a drop to 56.30.
  • In the eurozone, the producer price index ( PPI ) rose 1.1% in August on a MoM basis, lower than market expectations of an advance of 1.3%. In the previous month, the PPI had registered a revised rise of 2.5%.
  • Trade deficit in the US expanded to $73.30bn in August, compared with market expectations of a trade deficit of $69.60bn. The US had posted a trade deficit of $70.30bn in the prior month.
  • In the US, the final Markit services PMI registered a drop to 54.90 in September, compared with a level of 55.10 in the prior month. Markets were expecting Markit services PMI to fall to a level of 54.40. The preliminary figures had recorded a drop to 54.40.
  • The ISM Services Index climbed to 61.90 in September, in the US. The ISM Services Index had registered a reading of 61.70 in the prior month.
  • The economic optimism index eased to 46.80 in the US. In the previous month, the economic optimism index had recorded a level of 48.50.
  • The international merchandise trade surplus in Canada widened to CAD1.94bn in August, compared with an international merchandise trade surplus of CAD0.74bn in the previous month. Markets were anticipating the nation to post an international merchandise trade surplus of CAD0.43bn.
  • The Reserve Bank of New Zealand raised its interest rate by 25 basis points to 0.5%, meeting market expectations 0.5%.

Corporate Updates

South Africa

  • Kumba Iron Ore Limited (JO: KIOJ ): The ore mining company announced the appointment of Mpumi Zikalala as the Chief Executive Officer (CEO). Mpumi, currently Managing Director of De Beers Managed Operations, succeeds Themba Mkhwanazi, who has been appointed CEO of Anglo American’s global Bulk Commodities business following the decision of Seamus French to leave the group after 14 years. Both appointments will take effect on 1 January 2022.
  • EOH Holdings Limited (JO: EOHJ ): The technology company, in its FY21 trading statement, indicated that its operating profit increased between R125.00mn and R175.00mn, as compared with a loss of R1.30bn in the previous year. It expects its loss per share to be between 133.00c and 199.00c, as compared with 961.00c in the previous year. It expects its headline loss per share to be between 7.00c and 37.00c, as compared with 495.00c in the prior year.
  • Oil futures at 3-year high after Opec+ set to carry on with plan: Brent crude oil futures hit a new three-year high, with US benchmark crude close to 2014 peaks, after the Opec+ group of producers decided to stick to its planned output rises rather pumping even more.

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