Market Review, Corporate Updates, Commodities & Currencies - 23.07.21

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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, buoyed by gains in retail sector stocks.

  • Lewis Group, Cie Financiere Richemont SA (JO: CFRJ ) and Clicks (JO: CLSJ ) Group advanced 3.4%, 1.7% and 1.4%, respectively.

  • Mining sector stocks, Anglo American (JO: AMSJ ), African Rainbow Minerals (JO: ARIJ ) and Exxaro (JO: EXXJ ) Resource rose 1.8%, 1.4% and 1.1%, respectively.

  • Banking companies, Capitec Bank (JO: CPIJ ) Holdings, FirstRand (JO: FSRJ ) and Absa (JO: ABGJ ) Group gained 1.5%, 1.3% and 1.1%, respectively.

  • On the flipside, real estate companies, Attacq (JO: ATTJ ), Arrowhead Properties and Capital & Counties Properties (JO: CCOJ ) shed 3.4%, 3.1% and 1.0%, respectively.

  • Meanwhile, peer, Accelerate Property Fund (JO: APFJ ) added 2.9%.

  • The JSE All Share index advanced 1.3% to close at 67,404.27.

UK MARKET REVIEW

  • The UK market finished weaker yesterday, amid lower-than-expected corporate results and following the European Central Bank’s (ECB) dovish stance.

  • Consumer goods company, Unilever (LON: ULVR ) plunged 5.9%, after the company slashed its FY21 profit margin forecasts, despite reporting better than expected sales growth for 2Q21.

  • Peer, Reckitt Benckiser Group (LON: PSN ) shed 2.4%. NatWest Group (LON: NWG ) declined 2.7%, after the UK government cut its stake in the bank with its new plan.

  • On the flipside, 3i (LON: III ) Group advanced 4.2%, after the company revealed that its Action retail business has recovered from the COVID-19 pandemic slump, amid a strong start to its current financial year.

  • The FTSE 100 index declined 0.4% to close at 6,968.30.

US MARKET REVIEW

  • US markets ended higher yesterday, buoyed by the release of strong earnings by healthcare sector companies.

  • Biogen (NASDAQ: BIIB ) advanced 1.1%, after the company reported robust earnings for 2Q21 and revealed that it sold $2.00mn of its Alzheimer’s disease drug.

  • AT&T added 0.4%, after reporting better than expected 2Q21 earnings, with a low consumer churn rate and an increase in subscribers for its HBO Max service.

  • On the other hand, Texas Instruments (NASDAQ: TXN ) plummeted 5.3%, after its 3Q21 forecasts indicated towards a slow pace of revenue growth, amid global chip constraints.

  • The S&P 500 index rose 0.2% to settle at 4,367.48, while the DJIA index advanced 0.1% to close at 34,823.35.

  • The NASDAQ index climbed 0.4% to end the trading session at 14,684.60.

ASIA MARKET REVIEW

  • Asian markets are trading mixed this morning, despite overnight gains on Wall Street.

  • In Japan, markets remain closed on account of a public holiday.

  • In Hong Kong, technology firms, Kuaishou (HK: 1024 ) and Meituan (HK: 3690 ) have plunged 8.6% and 2.2%, respectively, amid regulatory concerns.

  • On the flipside, BYD Company has added 3.4%.

  • In South Korea, electronics company, LG Electronics (KS: 066570 ) has added 1.2%.

  • On the other hand, peer, Samsung Electronics (KS: 005930 ) has dropped 0.1%.

  • On Wednesday, the Nikkei 225 index advanced 0.6% to settle at 27,548.00.

  • Today, the Hang Seng index is trading 1.1% weaker at 27,425.97, while the Kospi index is trading 0.1% firmer at 3,252.51.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices fell 0.1% to trade at $73.17/bl, reversing the previous session’s gains.

  • Yesterday, Brent spot prices rose 1.4% to settle at $73.26/bl, following a rebound in economies from the coronavirus pandemic. Russian Energy Minister, Nikolai Shulginov revealed that the country might start banning gasoline exports, if the fuel prices continue to remain at the current levels, thus indicating a tighter supply in the near future.

  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 1.1% to $6.40/bushel.

  • At 06:00 SAST today, gold prices declined 0.2% to trade at $1,804.05/oz. Yesterday, gold gained 0.2% to close at $1,806.92/oz. However, gains were capped on account of a stronger dollar.

  • Yesterday, copper rose 1.1% to close at $9,417.78/mt. Aluminium closed 1.3% higher at $2,468.50/mt.

CURRENCIES

  • Yesterday, the South African rand weakened against the US dollar, after the South African Reserve Bank (SARB) kept its key interest rate unchanged at a five-decades low, as the unrest in the country had over shadowed the strong recovery reported in 1Q21 and led to a decline in the FY21 forecasts. The SARB lowered its forecasts for core inflation, which excludes food and energy, to 2.9% in 2021, compared with a previous 3.0%. Meanwhile, in the US, the number of people filing new claims for unemployment benefits rose to a two-month high for the week ended 16 July, indicating that the labour market is far away from the recovery with a resurgence in the coronavirus infections in the country. Meanwhile, the existing home sales rebounded in June, but the pace was moderate as higher prices and low inventory remained constraints.

  • The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.41%. Further, the yield on 2023 bond declined to 5.09%, while that for the longer-dated 2030 issue rose to 8.95%.

  • At 06:00 SAST, the US dollar is trading 0.2% higher against the South African rand at R14.7151, while the euro is trading 0.2% higher at R17.3259. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R20.2523.

  • Yesterday, the euro declined against most of the major currencies. The European Central Bank ( ECB ) assured of keeping the interest rates to the lowest for a longer period until the inflation rate touches its target rate of 2.0%, ahead of the end of “projection horizon and durably”.

  • At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.1774, while it has gained 0.1% against the British pound to trade at GBP0.8555.

ECONOMIC UPDATES

  • The SARB maintained its interest rate at 3.5%. Market anticipations were for the central bank to maintain its interest rate at 3.5%.

  • In its business optimism survey, the optimism among London businesses for the next six months has declined, with a net 27.0% of firms showing optimism about their business prospects in 3Q21, as compared with a net 38.0% of firms that showed optimism in the prior quarter.

  • The ECB held its interest rate steady at 0.0%. Markets were expecting the central bank to hold its interest rate at 0.0%.

  • In July, the preliminary consumer confidence index dropped unexpectedly to a level of -4.40 in the eurozone, compared to a reading of -3.30 in the prior month.

  • In the week ended 16 July 2021, the seasonally adjusted number of initial jobless claims recorded an unexpected rise to 419.00K in the US. Number of initial jobless claims had registered a revised reading of 368.00K in the prior week.

  • In the US, the Chicago Fed national activity index eased to 0.09 in June. In the previous month, the Chicago Fed national activity index had recorded a revised level of 0.26.

  • Existing home sales climbed 1.4% in the US on a monthly basis, in June. In the prior month, existing home sales had fallen by a revised 1.2%.

  • The Kansas City Fed manufacturing activity index in the US advanced to 30.00 in July, compared to a reading of 27.00 in the prior month.

  • On a monthly basis, the Leading Economic Index in the US recorded a rise of 0.7% in June, less than market expectations for an advance of 0.9%. Leading Economic Index had risen by a revised 1.2% in the previous month.

CORPORATE UPDATES

SOUTH AFRICA

  • Royal Bafokeng Platinum (JO: RBPCBe ) Limited: The platinum mining company, in its 1H21 trading statement and production update, indicated that 4E and platinum ounce production increased by 24.3% and 23.2%, respectively, compared with the 1H20 corresponding period, which was materially impacted by national lockdowns to curb the spread of COVID-19. The company expects its basic EPS for the period to be between R18.00 and R18.60.

  • Cashbuild Limited (JO: CSBJ ): The retail company, in its 4Q21 operational update, reported that its revenue advanced 38.0%, compared with that recorded in the corresponding previous period. The company announced that its number of stores for FY21 stood at 319.

  • Prosus (JO: PRXJn ) launches crypto payments for PayU users: Prosus has taken another swing at blockchain technology, by buying out a crypto platform to beef up its fintech business. The acquisition will enable it to offer users the ability to make payments with digital currency.

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