Market Review, Corporate Updates, Commodities & Currencies - 22.07.21

  • Market Overview
  • Editor's Pick

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, recovering from losses amid concerns over the spread of Delta variant of coronavirus infection.
  • Mining sector stocks, Merafe Resources, Anglo American (JO: AMSJ ) and BHP Group (JO: BHPJ ) soared 6.2%, 3.4% and 1.6%, respectively.
  • Real estate sector stocks, Capital & Counties Properties (JO: CCOJ ), Accelerate Property Fund (JO: APFJ ) and Fortress REIT rose 4.0%, 3.0% and 1.3%, respectively.
  • Retail sector stocks, Cie Financiere Richemont SA (JO: CFRJ ), Lewis Group and Clicks (JO: CLSJ ) Group advanced 2.7%, 1.3% and 0.9%, respectively.
  • On the contrary, gold mining stocks, Harmony Gold Mining Company and AngloGold Ashanti (JO: ANGJ ) shed 1.9% and 1.7%, respectively.
  • Pharmaceutical companies, Aspen (JO: APNJ ) Pharmacare Holdings and Netcare (JO: NTCJ ) dropped 1.0% and 0.5%, respectively.
  • The JSE All Share index advanced 1.3% to close at 66,558.46.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, buoyed by gains in travel and leisure stocks.
  • Whitbread (LON: WTB ) and InterContinental Hotels Group surged 6.1% and 3.8%, respectively.
  • Retail company, Next soared 7.5%, after reporting better than expected 2Q21 full price sales and raised its FY21 profit guidance.
  • Mining sector stocks, Antofagasta (LON: ANTO ) and BHP Group (LON: BHPB ) advanced 4.3% and 2.7%, respectively.
  • On the flipside, Royal Mail (LON: RMG ) declined 2.7%, after reporting a decline in its parcel volumes with ease in lockdown restrictions.
  • However, the company reported a rise in its 1Q21 profits.
  • The FTSE 100 index advanced 1.7% to close at 6,998.28.

US MARKET REVIEW

  • US markets ended higher yesterday, boosted by the release of robust corporate earnings report.
  • Prudential Financial (NYSE: PRU ) rose 2.2%, after it received a deal of $3.55bn from Empower Retirement to acquire its full service retirement business.
  • JPMorgan Chase (NYSE: JPM ) advanced 2.1%, after its Chief Executive Officer (CEO), Jamie Dimon received 1.50mn stock appreciation rights as a special award from the investment bank.
  • On the flipside, Netflix (NASDAQ: NFLX ) shed 3.3%, after reporting a fall in its new subscribers for 2Q21.
  • Further, the company expects fewer than expected new users in 3Q21.
  • The S&P 500 index rose 0.8% to settle at 4,358.69, while the DJIA index advanced 0.8% to close at 34,798.00.
  • The NASDAQ index climbed 0.9% to end the trading session at 14,631.95.

ASIA MARKET REVIEW

  • Asian markets are trading higher this morning, tracking overnight gains from Wall Street.
  • In Japan, markets are closed today on account of a holiday. In Hong Kong, automotive company, Geely Automobile Holdings (HK: 0175 ) has added 3.9%.
  • However, clothes manufacturing company, Shenzhou International Group Holdings (HK: 2313 ) has shed 1.6%.
  • In South Korea, technology company, Samsung Electronics (KS: 005930 ) has added 1.4%. However, LG electronics has shed 0.3%.
  • Yesterday, the Nikkei 225 index added 0.6% to close at 27,548.00.
  • Today, the Hang Seng index is trading 1.8% higher at 27,708.02, while the Kospi index is trading 1.1% higher at 3,251.91.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices fell 1.0% to trade at $71.52/bl, reversing previous session gains.
  • Yesterday, Brent spot prices rose 5.3% to settle at $72.23/bl. Meanwhile, the Energy Information Administration (EIA) reported that US crude inventories advanced by 2.10mn bls for the week ended 16 July. Further, Northern California regulators directed two of the state's largest oil refineries to slash their fine particulate air pollution, which will require costly modifications at the plants. The refineries will have to install wet gas scrubbers to reduce pollution emitted by their gasoline-making fluid catalytic cracking units (FCCU) within five years.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices ended steady at $6.4675/bushel.
  • At 06:00 SAST today, gold prices declined 0.3% to trade at $1,798.94/oz. Yesterday, gold declined 0.4% to close at $1,803.66/oz, as rebound in US Treasury yields sapped demand for the safe metal.
  • Yesterday, copper rose 0.2% to close at $9,318.00/mt. Aluminium closed 0.5% lower at $2,437.50/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In SA, consumer price index (CPI) eased on an annual basis in June, pushing policy makers to keep the interest rates to the lowest levels for some time in order to support the economy. Meanwhile, MBA mortgage applications in the US declined for the week as increasing debt rate led to a decline in refinancing and purchases of houses.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.42%. Further, the yield on 2023 bond declined to 5.15% while that for the longer-dated 2030 issue fell to 8.92%.
  • At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R14.5809, while the euro is trading 0.1% lower at R17.1929. At 06:00 SAST, the British pound has declined 0.2% against the South African rand to trade at R19.9803.
  • Yesterday, the euro advanced against most of the major currencies.
  • At 06:00 SAST, the euro marginally slipped against the US dollar to trade at $1.1791, while it has gained 0.1% against the British pound to trade at GBP0.8606.

ECONOMIC UPDATES

  • In South Africa, the CPI rose 0.2% on a MoM basis in June, meeting market expectations of a rise of 0.2%. In the prior month, the CPI had advanced 0.1%.
  • In Italy, the seasonally adjusted industrial sales eased 1.0% in May on a MoM basis. Industrial sales had risen 3.3% in the previous month.
  • The number of mortgage applications in the US registered a drop of 4.0%, in the week ended 16 July 2021, on a weekly basis. In the prior week, the number of mortgage applications had advanced 16.0%.
  • The new housing price index climbed 0.6% in Canada on a MoM basis, in June. The new housing price index had registered a rise of 1.4% in the prior month.
  • On a YoY basis, supermarket sales rose 1.7% in Japan, in June. Supermarket sales had advanced 2.9% in the prior month.
  • In June, on an annual basis, the final machine tool orders in Japan registered a rise of 96.6%. Machine tool orders had recorded a rise of 141.9% in the previous month. The preliminary figures had also indicated a rise of 96.6%.
  • In Australia, the business confidence index recorded a drop to 17.00 in 2Q 2021, compared with a revised reading of 19.00 in the previous quarter.

CORPORATE UPDATES

SOUTH AFRICA

  • Reinet Investments S.C.A (JO: RNIJ ): The investment vehicle company, revealed that as at 30 June 2021, net asset value (NAV) per share of Reinet Fund amounted to EUR30.11 compared with EUR31.44 in March 2021. As at 30 June 2021, the NAV amounted to EUR 5.16bn.
  • Mr Price Group (JO: MRPJ ) Limited: The retail company, in its update on the impact of civil unrest, revealed that damage caused by looting did not increase materially beyond what was first reported and totals 111 stores. Over 500 of the group’s stores were temporarily closed but has now significantly reduced to 20 temporary store closures.
  • Sappi Limited (JO: SAPJ ): The pulp and paper company, in its update regarding the impact of civil unrest, revealed that there was no material damage to any of the plants and the immediate focus is on reinstating logistical supply chains for raw materials and product delivery. The financial impact of the temporary closures and associated ramp-up of production at the three mills is a permanent loss of sales volumes of approximately 28.00k tons of dissolving pulp and 7.00k tons of paper with an expected negative impact on EBITDA of approximately R220.00mn in 4Q21 results.
  • Vaccination rate lags among non-medical scheme members: A higher proportion of medical scheme members have received a Covid-19 vaccine shot compared with non-medical scheme members under the government’s immunisation drive, raising fairness concerns.

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