Market Review, Corporate Updates, Commodities & Currencies - 22.10.21

South Africa Market Review

• South African markets closed in the red yesterday, as investors cast doubts on a possible default by the Chinese property company, Evergrande (HK: 3333 ).
• Telecommunications companies, Blue Label Telecoms (JO: BLUJ ) and MTN Group (JO: MTNJ ) declined 3.6% and 2.8%, respectively.
• Miners, BHP Group (JO: BHPJ ), Anglo American (JO: AMSJ ) and African Rainbow Minerals (JO: ARIJ ) shed 3.2%, 2.4% and 1.5%, respectively.
• Retailers, Cashbuild (JO: CSBJ ), Clicks Group (JO: CLSJ ) and Massmart Holdings (JO: MSMJ ) declined 3.2%, 2.7% and 0.7%, respectively.
• Banking stocks, FirstRand (JO: FSRJ ), Absa Group (JO: ABGJ ) and Capitec Bank Holdings (JO: CPIJ ) dropped 1.7%, 1.6% and 0.9%, respectively.
• On the flipside, real estate property stocks, Accelerate Property Fund (JO: APFJ ) and Capital & Counties Properties (JO: CCOJ ) gained 7.5% and 3.3%, respectively.
• The JSE All Share index declined 1.3% to close at 66,057.58.

UK Market Review

• The UK market finished weaker yesterday, dragged down by losses in mining sector stocks as investors morale was dampened on concerns a possible default by China’s Evergrande Group.
• Mining sector companies, Rio Tinto (LON: RIO ), BHP Group (LON: BHPB ) and Anglo American (LON: AAL ) shed 4.8%, 3.7% and 2.7%, respectively.
• Barclays (LON: BARC ) declined 0.8%, even though the lender reported robust profits for 9M21, with a strong performance of securities business and release of its bad debt provisions.
• On the contrary, consumer goods company, Unilever (LON: ULVR ) advanced 1.2%, following better than expected sales in 3Q21, buoyed by higher demand and rising prices in the US, India, China and Turkey.
• The FTSE 100 index declined 0.5% to close at 7,190.30.

US Market Review

• US markets ended mostly higher yesterday, buoyed by robust 3Q21 corporate earnings reports.
• Tesla (NASDAQ: TSLA ) rose 3.3%, after the company reported better than expected 3Q21 earnings.
• American Airlines Group (NASDAQ: AAL ) gained 1.9%, after the company reported lesser than expected loss in 3Q21.
• On the flipside, Southwest Airlines (NYSE: LUV ) shed 1.6%, despite reporting less than expected loss in 3Q21, with strong demand despite a reduction in traffic in August and September as a result of rising COVID-19 cases.
• AT&T (NYSE: T ) declined 0.6%, despite reporting better than expected profits in 3Q21 and increasing subscribers in its wireless business.
• The S&P 500 index rose 0.3% to settle at 4,549.78, while the DJIA index marginally declined to close at 35,603.08.
• The NASDAQ index climbed 0.6% to end the trading session at 15,215.70.

Asia Market Review

• Asian markets are trading higher this morning, tracking overnight gains on Wall Street and as investors shrug off fears on default by China’s Evergrande Group after the company said that it will pay interest on the bonds before the end of its grace period.
• In Japan, motorcycle manufacturing company, Yamaha Motor (T: 7272 ) has advanced 2.8%.
• In Hong Kong, glass manufacturing company, Xinyi Glass (HK: 0868 ) Holdings has gained 4.0%.
• On the flipside, resort company, Sands China (HK: 1928 ) has shed 1.5%.
• In South Korea, LG Electronics (KS: 066570 ) has shed 0.8%. On the flipside, steel manufacturer Hankook Steel has surged 8.4%.
• The Nikkei 225 index is trading 0.7% higher at 28,918.01.
• The Hang Seng index has advanced 0.4% to trade at 26,131.70, while the Kospi index is trading 0.3% higher at 3,015.94.

Commodities

• At 06:00 SAST today, Brent spot prices fell 0.8% to trade at $83.52/bl, extending previous sessions losses.
• Yesterday, Brent spot prices fell 1.4% to settle at $84.19/bl, amid forecasts for a warmer winter in the US and with an ease in coal and natural gas prices.
• Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 1.4% to $4.9875/bushel.
• At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,786.95/oz. Yesterday, gold marginally gained to close at $1,782.90/oz, as a weaker dollar and Treasury yields boosted the demand for the safe haven yellow metal.
• Yesterday, copper declined 3.8% to close at $10,078.50/mt. Aluminium closed 5.2% lower at $2,897.00/mt.

Currencies

• Yesterday, the South African rand weakened against the US dollar. In the US, the number of people filing initial jobless claims dropped to a 19-month low for the week ended 15 October, indicating an improvement in the labour market. Business activity dropped more than expected in October in the US, amid material shortages. In the US, home sales soared to an 8-months high in September, as increasing mortgage rates push buyers to make purchases before a potential hike in the rates following the Federal Reserve’s (Fed) tapering of bonds.
• The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.94%. Further, the yield on 2023 bond advanced to 5.39% while that for the longer-dated 2030 issue rose to 9.45%.
• At 06:00 SAST, the US dollar is trading 0.2% lower against the South African rand at R14.658, while the euro is trading 0.2% lower at R17.0431. At 06:00 SAST, the British pound has declined 0.2% against the South African rand to trade at R20.2166.
• Yesterday, the euro advanced against most of the major currencies. In the eurozone, consumer confidence deteriorated in October with soaring inflation and a slower pace of economic recovery.
• At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.1627, while it has marginally gained against the British pound to trade at GBP0.8430.

Economic Updates

• The seasonally adjusted number of initial jobless claims recorded a drop to 290.00K in the week ended 16 October 2021, in the US. Number of initial jobless claims had recorded a revised reading of 296.00K in the previous week.
• The Philadelphia Fed manufacturing index registered a drop to 23.80 in October, in the US, more than market expectations for a fall to a level of 25.00. Philadelphia Fed manufacturing index had recorded a reading of 30.70 in the prior month.
• The preliminary consumer confidence index in the eurozone fell to a level of -4.80 in October, compared with a level of -4.00 in the previous month. Market anticipations were for the consumer confidence index to fall to -5.00.
• On a MoM basis, existing home sales rose 7.0% in September, in the US. In the prior month, existing home sales had recorded a drop of 2.0%.
• On a monthly basis, the new housing price index recorded a rise of 0.4% in Canada, in September. In the previous month, the new housing price index had registered a rise of 0.7%.
• On an annual basis, the national consumer price index (CPI) rose 0.2% in September, in Japan. The national CPI had dropped 0.4% in the previous month.
• The flash manufacturing PMI in Japan recorded a rise to 53.00 in October. Manufacturing PMI had recorded a reading of 51.50 in the prior month.
• The flash Nikkei Japan services PMI advanced to 50.70 in Japan, in October. Nikkei Japan services PMI had recorded a level of 47.80 in the prior month.

Corporate Updates

South Africa

• Anglo American Platinum Limited (JO: AMSJ ): The platinum mining company, in its 3Q21 production report, stated that total PGMs production was in line with the same period of the prior year at 1,116,200 ounces, and 6.0% higher than in 2Q21. Own-managed mines PGMs production of 606,300 ounces decreased by 7.0%, due to planned maintenance at the Mogalakwena North concentrator, as well as the scheduled integration and ramp-up of the Unki concentrator following completion of the debottlenecking project. These were partly offset by strong production performances at Amandelbult and joint operations, where output rose by 7.0% and 19.0% respectively. Refined PGMs production increased by 39.0% to 1,420,400 ounces, due to the continued robust performance of the Anglo Convertor Plant (ACP), providing operational stability. PGMs sales volumes increased by 54.0% to 1,361,000 ounces due to the increase in refined production. Sales were slightly lower than refined production, to rebuild refined metal inventory which was drawn down following robust demand and sales earlier in the year. FY21 guidance for metal-in-concentrate (M&C) PGM production is unchanged at 4.20mn and 4.40mn ounces and refined PGM production and PGM sales volumes is unchanged at 4.80mn and 5.00mn ounces.
• Sasol Limited (JO: SOLJ ): The chemicals company, in its 1Q22 production updates, indicated that its mining production decreased from 8.90mntons in 4Q21 to 8.30mn tons. Gas production were 29.10bscf as compared with 29.00bdcf in 4Q21.
• Kumba Iron Ore Limited (JO: KIOJ ): The mining company, in its 3Q21 sales and production report, indicated that its production increased to 10.80 Mt, while equipment breakdown at Saldanha Port and weather disruptions affecting ship movements at the port led to lower sales of 10.10 Mt. Due to rail and port logistics performing below planned levels, the company’s full year production and sales are expected to be at the low end of guidance at 40.50 Mt and 39.50 Mt, respectively.
• Clicks Group Limited (OTC: CLCGY ): The retail company, in its FY21 results, reported that its revenue advanced 10.7% from the same period of the preceding year to R39.98bn. Its diluted EPS stood at 743.80c, compared with 751.40c recorded in the corresponding period of the previous year.
• Reinet Investments S.C.A. (JO: RNIJ ): The investment vehicle company, stated that its net asset value (‘NAV’) per share amounted to EUR27.92 based on 171.3 million shares in issue as on 30 September 2021.
• Adcorp Holdings Limited (JO: ADRJ ): The workforce solutions company, in its 1H22 trading statement, revealed that it expects its EPS to be between 26.20c and 33.40c, as compared with 36.20c in the corresponding previous period. It expects its HEPS to be between 28.10c and 35.50c, as compared with 37.30c in the same period of the prior year.
• Metrofile (JO: MFLJ ) buys out data storage player IronTree: Document management specialist Metrofile is set to buy a local data storage company, in the group’s first corporate action since a deal for its own takeover by a US firm fell apart recently, as it adds to its growing digital effort.
• Vivo multiplies retail fuel rollout: Vivo Energy (JO: VVOJ ), the owner of the Shell and Engen brands in 23 African countries, is rolling out new petrol stations at an accelerated rate as it knuckles down on its ambitious growth plans across the continent.
• Anglo American’s (JO: AGLJ ) third-quarter production lifts 2.0%: Global miner Anglo American said that its overall production rose 2.0% in the third quarter, driven by diamonds and iron ore, while copper output fell 6.0%.
• Sasol (JO: SOLJ ) flags railway woes even as it cashes in on record coal prices: Chemicals and energy group Sasol says it is also feeling the effects of problems on Transnet Freight Rail’s network, but it has also seen the benefits of record coal prices in its first quarter ending September.