Market Review, Corporate Updates, Commodities & Currencies - 09.12.21

South Africa Market Review

• South African markets closed in the red yesterday, dragged down by broad based losses in property and mining sector stocks.
• Real estate property sector stocks, Dipula Income Fund (JO: DIBJ ), Capital & Counties Properties (JO: CCOJ ) and Attacq (JO: ATTJ ) plunged 5.7%, 2.5% and 0.3%, respectively.
• Platinum mining companies, Northam Platinum Holdings (JO: NHMJ ) and Impala Platinum Holdings (JO: IMPJ ) shed 4.9% and 4.0%, respectively.
• Moreover, gold mining companies,Harmony Gold Mining Company (JO: HARJ ), Gold Fields (JO: GFIJ ) and AngloGold Ashanti (JO: ANGJ ) declined 4.5%, 4.1% and 3.9%, respectively.
• On the flipside, banking sector stocks, Capitec Bank Holdings (JO: CPIJ ) and FirstRand (JO: FSRJ ) added 1.6% and 0.1%, respectively.
• The JSE All Share index declined 0.7% to close at 72,403.88.

UK Market Review

• The UK market finished weaker yesterday, following reports that the UK Prime Minister, Boris Johnson may possibly announce some restrictions which could include adopting work from home and issuing COVID-19 passports for large venues.
• Defence and aerospace companies, Rolls-Royce Holdings (LON: RR ) and BAE Systems (LON: BAES ) declined 2.4% and 0.7%, respectively.
• Miners, Rio Tinto (LON: RIO ), BHP Group (LON: BHPB ) and Fresnillo (LON: FRES ) shed 1.6%, 1.1% and 0.9%, respectively.
• Retail companies, Associated British Foods (LON: ABF ), J Sainsbury (LON: SBRY ) and Tesco (LON: TSCO ) dropped 0.9%, 0.7% and 0.6%, respectively.
• However, peer, Just Eat Takeaway.com (LON: JETJ ) advanced 3.3%.
• On the contrary, property developers, Berkeley Group Holdings (LON: BKGH ), Persimmon (LON: PSN ) and Barratt Developments (LON: BDEV ) gained 2.4%, 1.3% and 1.2%, respectively.
• The FTSE 100 index marginally declined to close at 7,337.05.

US Market Review

• US markets ended higher yesterday, after pharmaceutical companies, Pfizer (NYSE: PFE ) and BioNTech (NASDAQ: BNTX ) indicated that a third dose of the COVID-19 vaccine neutralizes the Omicron variant which eased off investor concerns about a slowdown in global economic growth.
• Insurance companies, American Express (NYSE: AXP ), UnitedHealth Group (NYSE: UNH ) and Travelers (NYSE: TRV ) gained 1.2%, 0.9% and 0.4%, respectively.
• Pharmaceutical companies, Amgen (NASDAQ: AMGN ) and Johnson & Johnson (NYSE: JNJ ) rose 1.1% and 0.6%, respectively.
• On the flipside, financial sector stocks, JPMorgan Chase & Company (NYSE: JPM ) and Goldman Sachs Group (NYSE: GS ) declined 1.1% and 0.7%, respectively.
• The S&P 500 index rose 0.3% to settle at 4,701.21, while the DJIA index advanced 0.1% to close at 35,754.75.
• The NASDAQ index climbed 0.6% to end the trading session at 15,786.99.

Asia Market Review

• Asian markets are trading mostly higher this morning, tracking overnight gains on Wall Street.
• In Japan, digital solutions company, Hitachi (T: 6501 ) has declined 3.2%.
• On the contrary, financial sector stock, SoftBank Group (T: 9984 ) has added 1.6%.
• In Hong Kong, pharmaceutical company, CSPC Pharmaceutical Group (HK: 1093 ) has advanced 4.4%.
• On the other hand, glass manufacturing company, Xinyi Glass Holding (HK: 0868 ) has dipped 0.3%.
• In South Korea, protective products manufacturing company, Hancom Lifecare (KS: 372910 ) has soared 29.9%.
• On the flipside, banking company, KakaoBank Corporation (KS: 323410 ) has shed 4.7%.
• The Nikkei 225 index is trading marginally lower at 28,851.92.
• The Hang Seng index has advanced 0.9% to trade at 24,219.28, while the Kospi index is trading 0.4% higher at 3,012.69.

Commodities

• At 06:00 SAST today, Brent spot prices rose 0.7% to trade at $76.01/bl, extending the previous session’s gains.
• Yesterday, Brent spot prices rose 0.9% to settle at $75.5/bl, as investors expect the Omicron variant to have a lesser impact on global economic growth. Moreover, the US Energy Information Administration (EIA) reported that US crude inventories fell by 0.20mn bls for the week ended 3 December. Meanwhile, the EIA slashed its world oil consumption forecasts for both 2021 and 2022. In its Short-Term Energy Outlook (STEO) for December, the EIA now sees global oil consumption averaging 96.91mn bpd this year, down by 620,000 bpd compared to last month’s forecast of 97.53mn bpd. In 2022, world petroleum consumption is set to rise by 3.7% from 2021. Also, the EIA forecasts that global oil consumption will increase by 3.50mn bpd in 2022 compared to 2021.
• Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.3% to $5.75/bushel.
• At 06:00 SAST today, gold prices advanced 0.1% to trade at $1,784.69/oz. Yesterday, gold declined 0.1% to close at $1,782.99/oz, as a stronger greenback dampened demand for the safe haven yellow metal.
• Yesterday, copper rose 0.4% to close at $9,654.75/mt. Aluminium closed 0.2% lower at $2,630.25/mt.

Currencies

• Yesterday, the South African rand strengthened against the US dollar. In South Africa, retail sales dropped on an annual basis, indicating a slowdown in the country’s economic recovery from July’s civil unrest and currently the fourth wave of the COVID-19 pandemic. In the US, MBA mortgage applications increased amid a pickup in the refinancing activity following a drop in the interest rates for the week ended 3 December. Job openings in the US increased in the month of October.
• The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.83%. Further, the yield on 2023 bond advanced to 4.97%, while that for the longer-dated 2030 issue fell to 9.44%.
• At 06:00 SAST, the US dollar is trading 0.1% higher against the South African rand at R15.7323, while the euro is trading marginally lower at R17.8311. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R20.7770.
• Yesterday, the euro mostly advanced against most of the major currencies. In the UK, Prime Minister, Boris Johnson has imposed tougher COVID-19 restrictions, ordering people to work from home, wear masks in public places and use vaccine passes to slow the spread of the Omicron coronavirus variant. Meanwhile, the International Monetary Fund stated that despite inflation hitting a record high last month in the eurozone, the rise in prices is transitory and not worrisome.
• At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1335, while it has weakened 0.1% against the British pound to trade at GBP0.8583.

Economic Updates

• The business confidence index registered a rise to 94.90 in South Africa, in October, compared with a level of 91.00 in the prior month.
• On a MoM basis, retail sales fell 1.3% in South Africa, in October. Retail sales had advanced 5.1% in the previous month.
• On a QoQ basis, the final non-farm payrolls rose 0.4% in 3Q21, in France. Non-farm payrolls had recorded a rise of 1.1% in the previous quarter. The preliminary figures had indicated an advance of 0.5%.
• The business sentiment index recorded a rise to 104.00 in November, in France, compared with a reading of 102.00 in the prior month.
• In the US, the number of mortgage applications recorded a rise of 2.0% in the week ended 3 December 2021 on a weekly basis. In the prior week, the number of mortgage applications had recorded a drop of 7.2%.
• In the US, JOLTs job openings advanced unexpectedly to a level of 11,033.00K in October, compared with a reading of 10,438.00K in the previous month.
• The consumer price index (CPI) in China climbed 2.3% on an annual basis in November, compared with a rise of 1.5% in the previous month. Markets were expecting the CPI to rise 2.5%.
• The producer price index (PPI) recorded a rise of 12.9% in China on a YoY basis in November, compared with a rise of 13.5% in the prior month. Market expectations were for the PPI to advance 12.4%.
• Manufacturing activity in New Zealand slid 6.4% on a quarterly basis, in 3Q21. In the previous quarter, manufacturing activity had registered a drop of 0.4%.

Corporate Updates

South Africa

• Sanlam Limited (JO: SLMJ ): The insurance company, in its operational update for the 10-month period ended 31 October 2021, announced strong growth in life insurance and investment business in all markets. New business volumes were 17.0% higher than 2020 (46.0% higher than 2019). Life insurance volumes increased by 37.0%, investment volumes increased by 15.0% and general insurance volumes were up by 3.0%. Group solvency ratio remains strong at 176.0% on 30 September 2021. The Group will remain adequately capitalised and well within target ranges after taking account of the actuarial basis changes. The Group continued to make significant strategic progress over the reporting period. The Group launched a new set of health insurance offerings in partnership with AfroCentric to fulfil a market need for affordable health insurance. Strong client cash flows during the period underline the development of the investment management platform.
• Rand Merchant Investment Holdings Limited (JO: RMIJ ): The investment holding company announced that RMI and Sampo Plc have concluded a sale and purchase agreement in terms of which Sampo will acquire the 199,939,120 shares in Hastings Group Limited, constituting 30.0% of the issued shares in Hastings (Sale Shares), held indirectly by RMI. The company holds the Sale Shares through Main Street 1353 Proprietary Limited, an entity jointly owned by RMI and OUTsurance Holdings Limited. Sampo holds the balance of the 70.0% shareholding in Hastings prior to implementation of the Sale. The Sale was concluded on terms and conditions customary for transactions of this nature and is not subject to conditions precedent and is expected to become effective on receipt of the purchase consideration by Main Street and completion of the formal transfer processes by the parties, both expected to occur on 8 December 2021.
• Wescoal (JO: WSLJ ) six-month profit to rocket, thanks to Moabsvelden: Junior coal miner Wescoal says half-year of profits will rise almost sixfold, boosted by the contribution of its flagship Moabsvelden project in Mpumalanga.