Market Review, Corporate Updates, Commodities & Currencies - 17.09.21

SOUTH AFRICA MARKET REVIEW

• South African markets closed in the red yesterday, as investors continued to focus on the latest moves by regulators in China and the prospects for tighter monetary policy in the US.
• Mining sector stocks, African Rainbow Minerals (JO: ARIJ ), Anglo American (JO: AMSJ ) and BHP Group (JO: BHPJ ) plummeted 6.0%, 4.4% and 3.4%, respectively.
• Banking firms, Absa Group (JO: ABGJ ), FirstRand (JO: FSRJ ) and Capitec Bank Holdings (JO: CPIJ ) shed 4.6%, 2.9% and 1.0%, respectively.
• Retail sector companies, Massmart Holdings (JO: MSMJ ), Mr Price Group (JO: MRPJ ) and Cie Financiere Richemont SA (JO: CFRJ ) declined 1.4%, 1.3% and 0.7%, respectively.
• On the flipside, real estate sector companies, Dipula Income Fund (JO: DIBJ ), Attacq (JO: ATTJ ) and Capital & Counties Properties (JO: CCOJ ) soared 6.9%, 4.6% and 2.8%, respectively.
• The JSE All Share index declined 1.7% to close at 63,313.75.

UK MARKET REVIEW

• The UK market finished firmer yesterday, buoyed by gains in travel and leisure sector stocks.
• International Consolidated Airlines Group SA (LON: ICAG ), Whitbread (LON: WTB ) and InterContinental Hotels Group (LON: IHG ) advanced 3.9%, 2.7% and 1.5%, respectively.
• Industrial equipment rental company, Ashtead Group (LON: AHT ) surged 5.3%, after the company estimated that its current annual results will beat its expectations after it reported an increase in its 1Q22 adjusted pre-tax profits.
• Moreover, Rolls Royce Holdings (LON: RR ) rose 3.4%, after the Aukus defence pact was agreed upon between the US, UK and Australia.
• On the flipside, miners, Anglo American (LON: AAL ), Rio Tinto (LON: RIO ) and Fresnillo (LON: FRES ) declined 4.6%, 4.0% and 3.7%, respectively.
• The FTSE 100 index advanced 0.2% to close at 7,027.48.

US MARKET REVIEW

• US markets ended mostly lower yesterday, despite an unexpected increase in the country’s August retail sales.
• Banking sector stocks, Goldman Sachs Group (NYSE: GS ) and Wells Fargo (NYSE: WFC ) shed 1.3% and 0.8%, respectively.
• Insurance companies, Travelers (NYSE: TRV ) and UnitedHealth Group (NYSE: UNH ) dropped 0.6% and 0.2%, respectively.
• Cisco Systems (NASDAQ: CSCO ) eased 0.4%, after the company estimated that its revenue will grow between 5.0% and 7.0% more than market expectations in its next four fiscal years.
• On the brighter side, technology company, salesforce.com (NYSE: CRM ) added 1.6%. Financial services company, Visa (NYSE: V ) rose 0.2%.
• The S&P 500 index fell 0.2% to settle at 4,473.75, while the DJIA index declined 0.2% to close at 34,751.32.
• The NASDAQ index climbed 0.1% to end the trading session at 15,181.92.

ASIA MARKET REVIEW

• Asian markets are trading higher this morning, despite overnight losses on Wall Street.
• In Japan, digital advertising company, CyberAgent (T: 4751 ) has added 2.3%.
• On the flipside, steel manufacturing company, Nippon Steel (T: 5401 ) has plunged 6.0%.
• In Hong Kong, pharmaceutical company, CSPC Pharmaceutical Group (HK: 1093 ) has advanced 3.2%.
• On the contrary, China Evergrande Group (HK: 3333 ) has plummeted 6.8%, as investors cast doubt over the company’s debt issues.
• In South Korea, technology company, Samsung Electronics (KS: 005930 ) has added 1.1%, while peer, LG Electronics (KS: 066570 ) has declined 1.1%.
• The Nikkei 225 index is trading 0.5% higher at 30,483.25.
• The Hang Seng index has advanced 0.5% to trade at 24,789.98, while the Kospi index is trading 0.2% higher at 3,133.80.

COMMODITIES

• At 06:00 SAST today, Brent spot prices fell 0.1% to trade at $75.19/bl, extending the previous session’s losses.
• Yesterday, Brent spot prices marginally fell to settle at $75.26/bl, as threat to the US Gulf Coast crude production from Hurricane Nicholas waned.
• Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 1.3% to $5.14/bushel.
• At 06:00 SAST today, gold prices advanced 0.3% to trade at $1,758.26/oz. Yesterday, gold declined 2.2% to close at $1,753.77/oz, as strong US retail sales data gave a boost to the greenback, thus dampening the demand for the safe haven yellow metal.
• Yesterday, copper declined 2.7% to close at $9,348.50/mt. Aluminium closed 0.4% lower at $2,857.50/mt.

CURRENCIES

• Yesterday, the South African rand weakened against the US dollar. In the US, retail sales unexpectedly surged in August, buoyed by back-to-school shopping and child tax credit payments from the government, that helped calm expectations for a sharp slowdown in 3Q21 domestic economic growth. Initial jobless claims rose in the US, led by a jump in Louisiana, as Hurricane Ida continues to throw a wrench in the labor market’s broad recovery. Meanwhile, manufacturing activity in the US accelerated in September, despite material shortages.
• The yield on benchmark government bonds fell yesterday. The yield on 2026 bond stood at 7.41%. Further, the yield on 2023 bond declined to 4.94%, while that for the longer-dated 2030 issue fell to 8.90%.
• At 06:00 SAST, the US dollar is trading 0.1% higher against the South African rand at R14.6078, while the euro is trading 0.1% higher at R17.1896. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R20.1484.
• Yesterday, the euro declined against most of the major currencies. In the eurozone, trade surplus widened in July. Meanwhile, the European Central Bank (ECB) President, Christine Lagarde stated that the eurozone economy is regaining quicker than anticipated, mostly due to rapid vaccination drives that allowed large sectors of the economy to reopen.
• At 06:00 SAST, the euro marginally slipped against the US dollar to trade at $1.1766, while it has marginally gained against the British pound to trade at GBP0.8532.

ECONOMIC UPDATES

• In July, trade surplus in Italy widened to EUR8,762.00mn. Italy had reported a trade surplus of EUR5,681.00mn in the prior month.
• The seasonally adjusted trade surplus stood at EUR13.40bn in July, in the eurozone, following a trade surplus of EUR12.40bn in the previous month.
• The seasonally adjusted number of initial jobless claims registered a rise to 332.00 K in the US, in the week ended 11 September 2021, more than market expectations for a rise to a level of 330.00 K. In the prior week, number of initial jobless claims had recorded a revised level of 312.00 K.
• Retail sales (ex-auto & gas) registered a rise of 2.0% in the US on a monthly basis, in August. In the prior month, retail sales (ex-auto & gas) had recorded a revised drop of 1.4%.
• In September, the Philadelphia Fed manufacturing index in the US registered an unexpected rise to a level of 30.70, compared with a level of 19.40 in the previous month.
• In July, business inventories rose 0.5% in the US on a MoM basis, in line with market expectations of a rise of 0.5%. In the prior month, business inventories had recorded a revised rise of 0.9%.
• In August, the seasonally adjusted housing starts fell to a level of 260.20 K in Canada, more than market expectations for a drop to 268.00 K. In the prior month, housing starts had registered a revised reading of 270.70 K.
• New home sales in Australia registered a rise of 5.8% in August on a monthly basis. In the previous month, new home sales had registered a drop of 20.5%.
• The seasonally adjusted manufacturing PMI fell to a level of 40.10 in August, in New Zealand. In the previous month, manufacturing PMI had recorded a revised reading of 62.20.

CORPORATE UPDATES

SOUTH AFRICA

• FirstRand Limited (JO: FSRJ ): The bank holding company, in its FY21 results, reported that its interest and similar income declined 13.0% from the preceding year to R105.94bn. Its diluted EPS stood at R4.77, compared with R3.04, recorded in the previous year.
• SA Corporate Real Estate Limited (JO: SACJ ): The real estate investment trust company, in its 1H21 results, indicated that its revenue stood at R1.11bn compared to R1.05bn recorded in the same period of the previous year. Diluted EPS stood at 11.39c compared to a loss of 43.79c recorded in the corresponding period of the preceding year. Further, the company announced that it has, through its group companies, entered into a sale and implementation agreement with Firstmile Properties JHB CBD Crown Mines Proprietary Limited, to dispose of a property portfolio comprising a number of the seller’s residential properties, commercial rental businesses and development land in the Johannesburg inner-city. It will dispose of the sale assets to Firstmile for a total consideration of R546.25mn, exclusive of value-added tax and transfer duty but inclusive of an amount of R16.25mn, in respect of sales commission and transaction costs.
• Sibanye-Stillwater (JO: SSWJ ) chases battery material sector with ioneer joint venture: Sibanye-Stillwater has inked a R7.00bn deal for a 50.0% stake that is mooted to become the largest lithium mine in the US and marks the precious metals producer’s largest acquisition yet in a pivot to become a green metals company.