South Africa Market Review
- South African markets closed in the red yesterday.
- Meanwhile, the South African Reserve Bank’s (SARB) monetary policy committee (MPC) increased the repo rate by 25 basis points to 3.75%, as concern is rising about signs of sustained global inflation.
- Retail sector companies, Massmart Holdings (JO:MSMJ), Mr Price Group (JO:MRPJ) and Lewis Group (JO:LEWJ) declined 3.0%, 2.3% and 1.1%, respectively.
- Miners, African Rainbow Minerals (JO:ARIJ), Anglo American (JO:AMSJ) and BHP Group (JO:BHPJ) shed 1.9%, 1.2% and 0.1%, respectively.
- On the contrary, property sector companies, Accelerate Property Fund (JO:APFJ), Dipula Income Fund (JO:DIBJ) and Attacq (JO:ATTJ) advanced 1.6%, 1.5% and 0.7%, respectively.
- Financial sector companies, Investec (JO:INLJ), FirstRand (JO:FSRJ) and Absa Group Limited (JO:ABGJ) gained 1.9%, 1.0% and 0.9%, respectively.
- The JSE All Share index declined 0.1% to close at 70,866.57.
- The UK market finished weaker yesterday, dragged down by broad based losses in mining and energy sector stocks.
- Mining companies, Fresnillo (LON:FRES), Anglo American (LON:AAL) and Antofagasta (LON:ANTO) declined 3.6%, 2.8% and 2.1%, respectively.
- Oil and energy companies, Royal Dutch Shell (LON:RDSa) and BP (LON:BP) shed 1.7% and 1.6%, respectively.
- Pharmaceutical companies, GlaxoSmithKline (LON:GSK) and Hikma Pharmaceuticals (LON:HIK) dropped 3.0% and 2.4%, respectively.
- On the flipside, Royal Mail (LON:RMG) soared 9.8%, after the company announced that it would return GBP400.00mn of cash to its shareholders following a statutory profit in 1H22.
- Property developers, Persimmon (LON:PSN), Berkeley Group (LON:BKGH) Holdings and Taylor Wimpey (LON:TW) advanced 4.8%, 3.9% and 3.8%, respectively.
- The FTSE 100 index declined 0.5% to close at 7,255.96.
US Market Review
- US markets ended mostly higher yesterday, buoyed by the release of upbeat corporate earnings.
- Macy’s (NYSE:M) skyrocketed 21.2%, after the company reported better than expected 3Q21 results.
- Nvidia (NASDAQ:NVDA) surged 8.3%, after the chip making company reported a substantial increase in its 3Q21 revenues.
- Apple (NASDAQ:AAPL) gained 2.9%, amid reports that the company is attempting to ramp up its car-development plans and is focusing on self-driving functions.
- Deere & Co. (NYSE:DE) added 1.0%, after the company reached a new agreement with its workers and called off a strike going on since 14 October.
- The S&P 500 index rose 0.3% to settle at 4,704.54, while the DJIA index declined 0.2% to close at 35,870.95.
- The NASDAQ index climbed 0.5% to end the trading session at 15,993.71.
Asia Market Review
- Asian markets are trading mostly higher this morning, tracking overnight gains on Wall Street.
- In Japan, oil and energy company, Inpex Corporation (T:1605) has advanced 3.1%.
- On the contrary, pharmaceutical company, Kyowa Kirin Company (T:4151) has dropped 2.7%.
- In Hong Kong, market heavyweight, Alibaba Group Holdings (NYSE:BABA) has plummeted 10.2%, after the company reported less than expected 2Q22 revenues and earnings, amid a slower pace of economic growth in China.
- On the other hand, AAC Technologies (HK:2018) has added 2.1%.
- In South Korea, electronics company, LG Electronics (KS:066570) has soared 7.4%.
- On the contrary, SsangYong Motor (KS:003620) has plunged 19.2%.
- The Nikkei 225 index is trading 0.5% higher at 29,739.95.
- The Hang Seng index has declined 1.9% to trade at 24,835.79, while the Kospi index is trading 0.5% higher at 2,961.18.
Commodities
- At 06:00 SAST today, Brent spot prices rose 0.7% to trade at $82.33/bl, extending the previous session’s gains.
- Yesterday, Brent spot prices rose 1.1% to settle at $81.74/bl. The Biden administration has asked the world's largest oil consuming nations including China, India and Japan to release crude stockpiles in a coordinated effort to lower global energy prices. China stated that it was moving to tap its reserves, while Japan and South Korea have shown resistance to releasing their reserves.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.3% to $5.56/bushel.
- At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,863.43/oz. Yesterday, gold declined 0.5% to close at $1,858.94/oz, as strength in the greenback dampened demand for the safe haven yellow metal.
- Yesterday, copper rose 0.9% to close at $9,508.50/mt. Aluminium closed 0.2% higher at $2,633.00/mt.
Currencies
- Yesterday, the South African rand weakened against the US dollar. In South Africa, the SARB unexpectedly increased its key interest rate to 3.75% from a record low, amid persistent concerns about rising inflation. In the US, number of initial jobless claims dropped to pre-pandemic levels following recovery in the labour market, despite continued labour shortages. The Philadelphia Fed Manufacturing index rose to a 7-month high indicating strength in the manufacturing sector, despite soaring inflation. Meanwhile, the New York Federal Reserve (Fed) Bank President, John Williams stated that inflation in the US is becoming broad based and expectations for future price increases are rising, a trend policymakers will be watching closely. Also, Chicago Fed President, Charles Evans alleged that he sees “good momentum” for the US economy next year, as supply chain constrains currently slowing production of cars and snarling traffic at ports get rectified.
- The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.97%. Further, the yield on 2023 bond advanced to 5.23%, while that for the longer-dated 2030 issue rose to 9.45%.
- At 06:00 SAST, the US dollar is trading marginally lower against the South African rand at R15.639, while the euro is trading 0.2% lower at R17.7584. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R21.0900.
- Yesterday, the euro advanced against most of the major currencies. In the eurozone, the European Central Bank's Chief Economist, Philip R. Lane stated that eurozone inflation will ease next year and there is no sign that investors or consumers expect runaway prices in the medium term.
- At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1355, while it has weakened 0.1% against the British pound to trade at GBP0.8420.
Economic Updates
- The SARB surprisingly raised its interest rate by 25 basis points to 3.75%. Market anticipations were for the central bank to hold its interest rate at 3.50%.
- The seasonally adjusted trade surplus in Switzerland widened to CHF4.40bn in October. Switzerland had reported a trade surplus of CHF4.37bn in the prior month.
- On a YoY basis, industrial production in Switzerland rose 8.3% in 3Q21. Industrial production had risen 15.7% in the prior quarter.
- In November, Philadelphia Fed manufacturing index in the US climbed to 39.00, compared to a reading of 23.80 in the previous month. Markets were expecting Philadelphia Fed manufacturing index to climb to a level of 24.00.
- In October, on a MoM basis, the leading economic index registered a rise of 0.9% in the US. In the previous month, the leading economic index had registered a revised rise of 0.7%.
- In November, the Kansas City Fed manufacturing activity index in the US dropped to 24.00. In the previous month, the Kansas City Fed manufacturing activity index had registered a level of 31.00.
- In the US, initial jobless claims for the week ended 13 November 2021, totalled 268,000, a decline of 1,000 from a week ago and slightly higher than the Dow Jones estimate for 260,000.
- In October, on a YoY basis, the national consumer price index (CPI) in Japan rose 0.1%. In the previous month, the national CPI had recorded a rise of 0.2%
Corporate Updates
South Africa
- Life Healthcare Group Holdings Limited (JO:LHCJ): The healthcare company, in its FY21 results, indicated that its revenue rose to R26.89bn from R23.85bn posted in the previous year. Its diluted EPS increased from the prior year to 120.30c.
- Liberty Holdings Limited (JO:LBHJ): The financial services company, in its 9M21 operational update, reported that group long-term insurance indexed new business sales for the nine months to 30 September 2021 of R6.80bn reflected a 30.9% increase over the comparative period sales of R5.19bn. This increase is mainly due to SA Retail indexed new business sales of R5.97bn having increased by 29.0%, underpinned by good growth in recurring embedded banking, risk and investment product sales and continued growth in single premium conventional annuity and Evolve investment plan sales. Group total assets under management of R838.00bn has grown by 8.0% since 31 December 2020, largely due to favourable investment market performance and group net customer cash inflows. Group net external third party cash inflows remained strong at R15.60bn, primarily due to STANLIB’s net external third party cash inflows of R17.00bn which were slightly lower than last year.
- Netcare Limited (JO:NTCJ): The healthcare company, in its FY21 trading statement, reported that it expects its EPS to be between 52.00c and 57.00c as compared with 28.30c reported in the prior year. It expects its HEPS to be between 59.00c and 64.00c as compared with a headline loss per share of 3.60c in the posted in the previous year.
- Tsogo Sun Gaming Limited (JO:TSGJ): The gaming company, in its 1H22 trading statement, revealed that it expects its EPS to be between 29.10c and 33.10c, as compared with a loss per share of 52.60c reported in the corresponding prior year period. It expects its HEPS to be between 28.90c and 32.90c, as compared with a headline loss per share of 51.90c reported in the same period of the previous year.
- Tsogo Sun Hotels Limited (JO:TGOJ): The hotel company, in its 1H22 trading update, indicated that it expects its revenue to be between R0.90bn and R1.03bn, higher as compared with R0.34bn reported in the corresponding previous year period. It expects its loss per share to be between 9.80c and 12.20c, as compared with a loss per share of 16.20c reported in the corresponding prior year period.
- Investec Plc (JO:INPRp): The investing banking company, in its 1H22 results, stated that its total operating income before expected credit loss impairment charges increased to GBP951.13mn from GBP728.96mn posted in the corresponding period of the previous year. Its diluted EPS rose from the same period of the prior year to 24.40p.
- Liberty (JO:L2DJ) reassesses Covid-19 reserves before possible fourth wave: Liberty Group, an insurer and asset manager that will soon delist from the JSE and be incorporated into parent Standard Bank (JO:SBKJ), is gearing up for the potential fourth wave of Covid-19 infections by relooking into its pandemic reserves and vaccination rollouts.
- Tsogo Sun sales recover to half of pre-Covid levels in September: Tsogo Sun Hotels said trading conditions have steadily improved over the past six months, with room sales in September reaching almost half those of pre-pandemic levels.
- AB InBev (JO:ANHJ) bets on new barley variants to boost African beer-making capacity: SA Breweries (SAB), part of Anheuser Busch (BR:ABI) InBev, is betting new drought-resistant barley varieties will help it maintain record annual production in its big domestic beer market and meet demand elsewhere on the continent, officials said.