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Market Review, Corporate Updates, Commodities & Currencies - 10.12.21

Published 2021/12/10, 09:45
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South Africa Market Review

  • South African markets closed in the red on Friday, as reports that the Omicron variant is 4.2 times more transmissible in its early stages than the Delta variant dented investor sentiment.
  • Miners Exxaro Resources (JO:EXXJ), Kumba Iron Ore (JO:KIOJ) and African Rainbow Minerals (JO:ARIJ) shed 3.3%, 3.1% and 1.1%, respectively.
  • Financial services companies, Alexander Forbes Group Holdings (JO:AFHJ), Transaction Capital (JO:TCPJ) and Old Mutual (LON:OMU) declined 3.2%, 1.5% and 0.7%, respectively.
  • On the flipside, real estate property stocks, Delta Property Fund (JO:DLTJ), Dipula Income Fund (JO:DIBJ) and Growthpoint Properties (JO:GRTJ) advanced 3.6%, 1.3% and 1.2%, respectively.
  • Retailers, Clicks Group (JO:CLSJ), Lewis Group (JO:LEWJ) and Mr Price Group (JO:MRPJ) gained 1.9%, 1.5% and 0.5%, respectively.
  • The JSE All Share index declined 0.3% to close at 72,207.64.

UK Market Review

  • The UK market finished weaker yesterday, following announcement of tighter restrictions by Prime Minister Boris Johnson to curb infections of the Omicron variant of Covid-19.
  • Rolls-Royce Holdings (LON:RR) shed 3.4%, after the company reported sales at its civil aerospace which were lower than expected.
  • The company estimated that its annual free cash flow would be better than expected following improved trading.
  • Travel and leisure companies, International Consolidated Airlines Group SA (LON:ICAG), InterContinental Hotels Group (LON:IHG) and Whitbread (LON:WTB) declined 3.3%, 1.6% and 0.7%, respectively, following tougher Covid-19 restrictions by the Prime Minister.
  • On the contrary, AstraZeneca (LON:AZN) added 0.9%, after its Evusheld antibody combination was granted emergency use authorisation by the US Food and Drug Administration (FDA).
  • The FTSE 100 index declined 0.2% to close at 7,321.26.

US Market Review

  • US markets ended lower yesterday, as investors await the release of November’s Inflation data due today.
  • Technology stocks, Intel (NASDAQ:INTC), salesforce.com (NYSE:CRM) and Microsoft (NASDAQ:MSFT) declined 2.5%, 0.8% and 0.6%, respectively.
  • Aerospace company, Boeing (NYSE:BA) dropped 1.6%. Telecommunications company, Verizon Communications (NYSE:VZ) shed 0.7%.
  • On the other hand, Hormel Foods Corporation (NYSE:HRL) advanced 4.7%, after the company reported better than expected 4Q21 sales.
  • Walmart (NYSE:WMT) gained 1.4%. The S&P 500 index fell 0.7% to settle at 4,667.45, while the DJIA index marginally declined to close at 35,754.69.
  • The NASDAQ index eased 1.7% to end the trading session at 15,517.37.

Asia Market Review

  • Asian markets are trading lower this morning, tracking overnight losses on Wall Street.
  • In Japan, automotive manufacturer, Mitsubishi Motors (T:7211) has declined 3.2%.
  • On the flipside, food processing company, NH Foods (T:2282) has gained 2.3%.
  • In Hong Kong, glass manufacturing company, Xinyi Glass Holdings (HK:0868) has shed 2.6%.
  • On the contrary, sportswear company, Anta Sports Products (HK:2020) has added 0.9%.
  • In South Korea, Samsung Electronics (KS:005930) has declined 1.2%, while peer, LG Electronics (KS:066570), has added 1.2%.
  • The Nikkei 225 index is trading 0.6% lower at 28,555.37.
  • The Hang Seng index has declined 0.5% to trade at 24,126.82, while the Kospi index is trading 0.7% lower at 3,008.22.

Commodities

  • At 06:00 SAST today, Brent spot prices rose 0.5% to trade at $73.96/bl, reversing previous session losses.
  • Yesterday, Brent spot prices fell 2.5% to settle at $73.6/bl, as demand concerns intensified after countries imposed restrictions to curb Omicron variant of coronavirus. Moreover, demand was impacted amid increasing fears about the economic outlook in China, world’s biggest oil importer, after Fitch slashed its ratings on Chinese property developers, following defaulted on offshore bonds. The decision of OPEC+ to raise oil output in January despite its estimates of oversupply, seems to be successful as prices stabilise.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.5% to $5.7775/bushel.
  • At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,778.55/oz. Yesterday, gold declined 0.4% to close at $1,775.33/oz, as a stronger US greenback dampened the demand for the safe haven yellow metal.
  • Yesterday, copper declined 1.2% to close at $9,541.75/mt. Aluminium closed 0.1% lower at $2,626.80/mt.

Currencies

  • Yesterday, the South African rand weakened against the US dollar. In South Africa, manufacturing production reported its sharpest decline in October, more than that in July amid the civil unrest, following labour constraints and load-shedding hitting the industry. In the US, the initial jobless claims dropped to the lowest level in more than 52 years for the week ended 3 December, with tighter labour market conditions amid an acute labour shortage.
  • The yield on benchmark government bonds were mixed yesterday. The yield on 2026 bond stood at 7.83%. Further, the yield on 2023 bond declined to 4.96% while that for the longer-dated 2030 issue rose to 9.45%.
  • At 06:00 SAST, the US dollar is trading 0.3% higher against the South African rand at R15.9894, while the euro is trading 0.3% higher at R18.0638. At 06:00 SAST, the British pound has gained 0.3% against the South African rand to trade at R21.1528.
  • Yesterday, the euro declined against most of the major currencies. In Germany, trade surplus rose with exports and imports rising more than expected in October.
  • At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.1298, while it has marginally weakened against the British pound to trade at GBP0.8540.

Economic Updates

  • The current account balance to GDP eased to 3.6% in 3Q21, in South Africa, compared with a revised reading of 5.1% in the previous quarter.
  • On a YoY basis, gold production fell 3.5% in October, in South Africa. Gold production had recorded a revised drop of 5.6% in the prior month.
  • On an annual basis, mining production in South Africa recorded a rise of 2.1% in October, compared with market expectations of a drop of 0.85%. In the previous month, mining production had registered a revised drop of 0.8%.
  • In South Africa, platinum production advanced 24.0% in October on a YoY basis. Platinum production had fallen 7.5% in the previous month.
  • In October, the seasonally adjusted manufacturing production index in South Africa eased 5.9% on a monthly basis, compared with market expectations of an advance of 0.3%. The manufacturing production index had recorded a revised rise of 3.0% in the previous month.
  • On a MoM basis, the seasonally adjusted exports in Germany rose 4.1% in October, more than market expectations for a rise of 0.9%. Exports had registered a drop of 0.7% in the previous month.
  • The non-seasonally adjusted current account surplus in Germany fell to EUR15.40bn in October. Germany had reported a current account surplus of EUR20.00bn in the prior month.
  • On a monthly basis, in Germany, the seasonally adjusted imports climbed 5.0% in October, higher than market expectations of a rise of 0.4%. In the prior month, imports had climbed 0.1%.
  • In October, the seasonally adjusted trade surplus in Germany dropped to EUR12.80bn, compared with a trade surplus of EUR16.20bn in the prior month.
  • In week ended 04 December 2021, the seasonally adjusted number of initial jobless claims in US recorded a drop to 184.00 K. Number of initial jobless claims had registered a revised reading of 227.00 K in the prior week.
  • The final wholesale inventories in US recorded a rise of 2.3% in October on a MoM basis, compared with a rise of 1.4% in the prior month. The preliminary figures had recorded an advance of 2.2%. Markets were expecting the wholesale inventories to climb 2.2%.
  • The seasonally adjusted manufacturing PMI in New Zealand recorded a drop to 50.60 in November, compared with a level of 54.30 in the prior month.

Corporate Updates

South Africa

  • Afrimat Limited (JO:AFTJ): The building materials company announced that it has agreed to acquire from Glenover certain assets including principally the right to mine the vermiculite deposit and certain deposits of phosphate rock located at the Glenover Mine, owned by Glenover, for a purchase consideration and a sale of Shares agreement with Ferminore Proprietary Limited, Galileo Resources South Africa Proprietary Limited, Galagen Proprietary Limited and Glenover, in terms of which agreement, read with the previously concluded heads of agreement dated 4 November 2020, the company has the option, in its discretion, to purchase 100.0% of the issued ordinary shares in Glenover from the shareholders together with all claims that the Shareholders may have against the company. The total purchase consideration payable by the company for the sale assets and the sale shares and sale claims, is of R550.00mn.
  • Tongaat Hulett Limited (JO:TONJ): The agricultural processing company, in its 1H22 results, indicated that its revenue rose to R8.50bn from R8.12bn posted in the corresponding period of the previous year. Its diluted EPS decreased from the same period of the prior year to 174.00c.
  • Schroder (JO:SCDJ) upbeat about European property fundamentals: Schroder European Real Estate Investment Trust, a property fund that gives SA investors exposure to European cities, has sounded a note of optimism, saying its properties in that continent are in demand.
  • Oil continues to rally as Omicron fears ease: Oil prices extended gains on confidence that the Omicron coronavirus variant would not dent global growth, even as some governments stepped up curbs to stop its rapid spread.

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