South Africa Market Review
- South African markets closed in the red yesterday, as investors assessed US debt ceiling talks.
- Real estate companies, Delta Property Fund (JO:DLTJ), Fortress REIT (JO:FFAJ) and Dipula Income Fund (JO:DIBJ) shed 4.6%, 2.9% and 2.6%, respectively.
- Diversified miners, Pan African Resources (JO:PANJ), Anglo American (JO:AMSJ), African Rainbow Minerals (JO:ARIJ) and Merafe Resources (JO:MRFJ) declined 1.8%, 1.3%, 1.2% and 0.9%, respectively.
- Retailers, Pick n Pay Stores (JO:PIKJ) and Mr Price Group (JO:MRPJ) dropped 1.6%, each.
- On the flipside, investment companies, Brimstone Investment Corporation (JO:BRTJ) and Hosken Consolidated Investments (JO:HCIJ) added 2.8% and 0.7%, respectively.
- Standard Bank Group (JO:SBKJ) and Investec (JO:INLJ) advanced 0.8% and 0.6%, respectively.
- The JSE All Share index dropped 0.4% to close at 77,973.02.
UK Market Review
- The UK market finished weaker yesterday, amid an unexpected rise in regional unemployment rate and weaker corporate results.
- Telecommunications company, Vodafone Group (LON:VOD) shed 7.4%, after the company announced 11,000 job cuts and forecasted a drop in free cash flows.
- Peer, BT Group (LON:BT) declined 2.2%. Retailers, Kingfisher (LON:KGF) and JD Sports Fashion (LON:JD) dropped 3.0% and 2.5%, respectively.
- Energy companies, BP (LON:BP) and Shell (LON:RDSa) dropped 1.2% and 1.1%, respectively.
- On the contrary, marketing company, DCC (LON:DCC) gained 2.8%, after the company reported jump in its annual profits.
- Property developer, Land Securities Group (LON:LAND) advanced 2.4%, despite reporting a loss in its annual results amid soaring interest rates and weaker economic environment.
- The FTSE 100 index declined 0.3% to close at 7,751.08.
US Market Review
- US markets ended weaker yesterday, amid concerns over US debt ceiling talks.
- Biotechnology company, Horizon Therapeutics (NASDAQ:HZNP) plunged 14.2%, amid reports that the Federal Trade Commission is expected to file a lawsuit to block Amgen’s $27.80bn acquisition deal.
- Retailer, Home Depot (NYSE:HD) shed 2.2%, after the company reported weaker than expected 1Q23 earnings and issued weaker sales guidance for 2023.
- Insurance companies, UnitedHealth Group (NYSE:UNH) and Travelers Companies (NYSE:TRV) fell 1.5% and 0.7%, respectively.
- The S&P 500 index declined 0.6% to settle at 4,109.90, while the DJIA index fell 1.0% to close at 33,012.14.
- The NASDAQ index dropped 0.2% to end the trading session at 12,343.05.
Asia Market Review
- Asian markets are trading mostly higher this morning.
- In Japan, banking company, Softbank Group (TYO:9984) has advanced 3.8%.
- On the flipside, transportation company, Kawasaki Kisen Kaisha (TYO:9107) has declined 2.5%.
- In Hong Kong, pharmaceutical company, Hansoh Pharmaceutical (HK:3692) has shed 3.3%.
- On the other hand, consumer electronics company, Lenovo Group Holding (HK:0992) had added 0.9%.
- In South Korea, advertising company, YG plus (KS:037270) has surged 10.8%.
- On the contrary, confectionary items company, ORION Corporation (KS:271560) has plunged 7.3%.
- The Nikkei 225 index is trading 0.7% higher at 30,039.41.
- The Hang Seng index has declined 0.4% to trade at 19,899.18, while the Kospi index is trading 0.6% higher at 2,494.12.
Commodities
- At 05:30 SAST today, Brent prices rose 0.1% to trade at $74.95/bl.
- Yesterday, Brent prices fell 0.4% to settle at $74.91/bl, following weaker than expected Chinese economic data. Moreover, the American Petroleum Institute (API) reported that the US crude oil inventories rose by 3.69mn bls in the week ended 12 May 2023. Meanwhile, the International Energy Agency (IEA) projected a surge in oil demand by 200,000 bpd to a record 102 million bpd this year.
- At 05:30 SAST today, gold prices advanced 0.1% to trade at $1,991.38/oz. Yesterday, gold declined 1.5% to close at $1,988.60/oz, as a stronger dollar dented demand for the safe haven yellow metal.
- Yesterday, copper declined 1.7% to close at $8,076.00/mt. Aluminium closed 0.1% higher at $2,265.50/mt.
Currencies
- Yesterday, the South African rand weakened against the US dollar. In South Africa, the unemployment rate rose in 1Q23, with the highest employment losses in energy-intensive and private household sectors. Separately, in the US, retail sales rose less than expected in April. Meanwhile, industrial production advanced in April.
- The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 9.41%. Further, the yield on the longer-dated 2030 issue rose to 10.76%.
- At 05:30 SAST, the US dollar is trading marginally lower against the South African rand at R19.0736, while the euro is trading marginally higher at R20.7276. At 05:30 SAST, the British pound has marginally declined against the South African rand to trade at R23.8156.
- Yesterday, the euro advanced against most of the major currencies. In Germany, the ZEW economic sentiment index dropped more than expected in May. In the eurozone, gross domestic product (GDP) advanced in line with market expectations in 1Q23. Meanwhile, the ZEW economic sentiment unexpectedly dropped in May.
- At 05:30 SAST, the euro marginally advanced against the US dollar to trade at $1.0869, while it has marginally gained against the British pound to trade at GBP0.8706.
Economic Updates
- In South Africa, the unemployment rate rose to 32.9% on a QoQ basis in 1Q23, less than market expectations and compared to 32.7% in the prior quarter.
- In the UK, the ILO unemployment rate rose to 3.9% in March, more than market expectations and compared to 3.8% recorded in the prior month.
- In Italy, the consumer price index (CPI) climbed 0.4% on a MoM basis in April, less than market expectations and compared to a drop of 0.4% recorded in the previous month.
- In Germany, the ZEW current situation index eased to a level of -34.80 in May, compared to a level of -32.50 recorded in the prior month.
- In Germany, the economic sentiment index registered a drop to a level of -10.70 in May, compared to a level of 4.10 recorded in the prior month. Markets were anticipating the economic sentiment index to drop to a level of -5.50.
- In the eurozone, the economic sentiment index unexpectedly dropped to a level of -9.40 in May, compared to a reading of 6.40 recorded in the prior month.
- In the eurozone, seasonally adjusted trade balance recorded a surplus of EUR17.00bn in March, compared to a deficit of EUR0.10 bn in the previous month.
- In the eurozone, gross domestic product (GDP) rose 0.1% on a QoQ basis in 1Q23, compared to a flat reading recorded in the prior quarter.
- In the US, retail sales rose 0.4% on a MoM basis in April, less than market expectations and compared to a revised drop of 0.7% recorded in the prior month.
- In the US, the housing market index registered an unexpected rise to 50.00 in May, compared to a reading of 45.00 in April.
- In the US, industrial production rose 0.5% on a MoM basis in April, compared to a revised flat reading in the prior month.
- In Canada, the CPI advanced 0.7% on a MoM basis in April, more than market expectations and compared to a rise of 0.5% recorded in the prior month.
- In Japan, preliminary GDP recorded a rise of 0.4% on a QoQ basis in 1Q23. GDP had registered a flat reading in the prior quarter.
Corporate Updates
South Africa
- Santam Limited (JO:SNTJ): The insurance company, in its operational update for the three months ended 31 March 2023, revealed that operating conditions during the period remained challenging, with insurance growth prospects dampened by the impact of electricity supply disruptions on economic growth and pressure on personal disposable income from elevated inflation and higher interest rates. Despite these conditions, the group showed operational resilience and achieved sound financial results for the period. Moreover, the Santam Client Solutions and Broker Solutions businesses achieved good growth in gross written premiums, with both the intermediated and direct channels contributing to the improved growth.
- Reunert Limited (JO:RLOJ): The company, in its trading update for the for the six-month period ended 31 March 2023, announced that it expects EPS to be between 249.20c and 268.80c as compared with 196.00c reported in the same period of the prior year. HEPS is expected to be between 257.30c and 276.80c as compared with 195.00c reported in the corresponding period of the prior year. Further, the company intends to release its financial results on 23 May 2023.
- Octodec Investments Limited (JO:OCTJ): The real estate investment trust company, in its 1H23 results, indicated that its revenue rose to R961.10mn from R939.70mn posted in the corresponding period of the previous year. Its basic and diluted EPS increased 50.5% from the same period of the prior year to 135.30c.
- Oil climbs on US plans to refill reserves: Oil prices rose for a second day, supported by US plans to purchase oil for its strategic petroleum reserve and by raging wildfires in Canada that fuelled supply worries.