South Africa Market Review
- South African markets closed in the green yesterday, buoyed by broad based gains in mining sector stocks.
- Platinum mining companies, Anglo American Platinum (JO:AMSJ), Impala Platinum Holdings (JO:IMPJ) and Royal Bafokeng Platinum (JO:RBPCBe) advanced 3.8%, 3.1% and 1.3%, respectively.
- Gold miners, Gold Fields (JO:GFIJ), AngloGold Ashanti (JO:ANGJ) and Harmony Gold Mining (JO:HARJ) gained 2.9%, 2.5% and 1.7%, respectively.
- Real estate property companies, Fairvest, Attacq (JO:ATTJ) and Emira Property Fund (JO:EMIJ) added 1.7%, 1.1% and 0.9%, respectively.
- Bankers, Nedbank Group (JO:NEDJ), Absa Group (JO:ABGJ) and Capitec Bank Holdings (JO:CPIJ) rose 1.6%, 1.2% and 1.0%, respectively.
- On the flipside, retail companies, Cashbuild (JO:CSBJ), Massmart Holdings (JO:MSMJ) and Mr Price (JO:MRPJ) plunged 7.1%, 2.6% and 2.5%, respectively.
- The JSE All Share index advanced 0.2% to close at 72,314.81.
- The UK market finished firmer yesterday, boosted by gains in financial sector stocks.
- Standard Chartered (LON:STAN), HSBC Holdings (LON:HSBA) and Barclays (LON:BARC) jumped 5.0%, 3.5% and 3.3%, respectively.
- Oil and energy companies, BP (LON:BP) and Royal Dutch Shell (LON:RDSa) gained 4.3% and 3.7%, respectively.
- Royal Mail (LON:RMG) advanced 1.3%, after the company announced that it will slash around 700 manager post jobs as part of cost cutting efforts aimed at transforming the centuries-old postal company.
- On the contrary, real estate property companies, Barratt Developments (LON:BDEV) and Taylor Wimpey (LON:TW) shed 1.7% and 1.5%, respectively.
- Unilever (LON:ULVR) dipped 0.2%, after the company revealed its plan to cut about 1,500 management jobs.
- The FTSE 100 index advanced 1.0% to close at 7,371.46.
US Market Review
- US markets ended lower yesterday, as investors focus on the US Federal Reserve’s (Fed) policy meeting later this week.
- However, losses were capped by the release of robust corporate earnings.
- General Electric (NYSE:GE) plummeted 6.0%, after the company reported a decrease in its 4Q21 revenues.
- Nvidia Corporation (NASDAQ:NVDA) shed 4.5%, on the back of news that the company is planning to back out from its planned purchase of Arm Ltd. from SoftBank Group Corporation (T:9984).
- Meanwhile, American Express (NYSE:AXP) rallied 8.9%, after the company reported better than expected revenue and earnings in its 4Q21 results, indicating record levels of spending through its cards.
- The S&P 500 index fell 1.2% to settle at 4,356.45, while the DJIA index declined 0.2% to close at 34,297.73.
- The NASDAQ index eased 2.3% to end the trading session at 13,539.29.
Asia Market Review
- Asian markets are trading mostly higher this morning, despite overnight losses on Wall Street.
- Also, investors look ahead to the US Fed’s monetary policy meeting this week.
- In Japan, steel producing company, Japan Steel Works (T:5631) has shed 2.3%.
- On the flipside, SoftBank Group (T:9984) has advanced 3.3%.
- In Hong Kong, NetEase (HK:9999) has gained 4.3%.
- On the other hand, pharmaceutical company, Wuxi Biologics (HK:2269) has declined 4.7%.
- In South Korea, electronics company, LG Electronics (KS:066570) has eased 1.2%.
- Meanwhile, Kumho Electric (KS:001210) has surged 11.6%.
- The Nikkei 225 index is trading 0.4% lower at 27,034.64.
- The Hang Seng index has marginally advanced to trade at 24,243.66, while the Kospi index is trading 0.2% higher at 2,724.37.
Commodities
- At 06:00 SAST today, Brent spot prices fell 0.3% to trade at $87.33/bl, reversing the previous session’s gains.
- Yesterday, Brent spot prices rose 1.1% to settle at $87.61/bl, on prospects of tighter supply amid Ukraine and Russia tensions, threats to infrastructure in the United Arab Emirates and struggles by OPEC+ to hit its monthly output increase target. Moreover, the American Petroleum Institute (API) reported that crude oil inventories declined by 0.87mn bls for the week ended 21 January. Further, the US Department of Energy approved an exchange of 13.40mn bls of crude oil from the Strategic Petroleum Reserve to seven companies as part of President Joe Biden's plan to help control oil prices.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.2% to $6.03/bushel.
- At 06:00 SAST today, gold prices marginally declined to trade at $1,847.17/oz. Yesterday, gold gained 0.3% to close at $1,848.02/oz, as a weaker greenback gave a boost to demand for the safe haven yellow metal.
- Yesterday, copper rose 0.7% to close at $9,835.75/mt. Aluminium closed 2.0% higher at $3,103.50/mt.
Currencies
- Yesterday, the South African rand strengthened against the US dollar. In the US, the home price index accelerated at a slower pace in November, amid steady mortgage rates. Consumer confidence in the US tumbled slightly in January, with consumers planning to purchase homes, automobiles and other big- ticket items even as they grew less optimistic about business and labour market conditions in the short term. Meanwhile, manufacturing activity in the US central Atlantic region expanded in January at the slowest pace since September,
- The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.73%. Further, the yield on 2023 bond advanced to 5.34%, while that for the longer-dated 2030 issue rose to 9.34%.
- At 06:00 SAST, the US dollar is trading 0.1% higher against the South African rand at R15.2421, while the euro is trading 0.1% lower at R17.2295. At 06:00 SAST, the British pound has marginally declined against the South African rand to trade at R20.5907.
- Yesterday, the euro declined against most of the major currencies. In Germany, business morale improved in January for the first time in seven months, following an ease in supply bottlenecks that brightened the outlook for manufacturers, thus assuring a strong recovery from the pandemic slump.
- At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.1304, while it has marginally weakened against the British pound to trade at GBP0.8369.
Economic Updates
- The leading indicator registered a rise to 125.90 in South Africa, in November, compared with a level of 125.20 in the prior month.
- In January, CBI trends selling prices advanced to 66.00 in the UK. CBI trends selling prices had recorded a reading of 62.00 in the prior month.
- In January, the Ifo business climate index in Germany rose unexpectedly to 95.70. In the previous month, the Ifo business climate index had registered a reading of 94.70.
- The Ifo business expectations index in Germany registered a rise to 95.20 in January, more than market expectations for a rise to a level of 93.00. In the prior month, the Ifo business expectations index had registered a reading of 92.60.
- The Ifo current assessment index in Germany fell to a level of 96.10 In January, compared with a reading of 96.90 in the previous month. Market anticipations were for the Ifo current assessment index to fall to 96.30.
- In January, the Richmond Fed manufacturing index in the US dropped to 8.00. The Richmond Fed manufacturing index had recorded a reading of 16.00 in the prior month.
- In January, the CB consumer confidence index eased to 113.80 in the US, compared with a revised reading of 115.20 in the prior month. Markets were anticipating the CB consumer confidence index to drop to a level of 111.80.
- On a MoM basis, the seasonally adjusted S&P/Case-Shiller composite index of 20 metropolitan areas rose 1.18% in November, in the US. In the prior month, the S&P/Case-Shiller composite index of 20 metropolitan areas had advanced by a revised 0.96%.
- The housing price index in US registered a rise of 1.1% on a MoM basis, in November. In the prior month, the housing price index had registered a rise of 1.1%.
Corporate Updates
South Africa
- AVI Limited (JO:AVIJ): The food and beverage company, in its 1H22 trading statement, revealed that group revenue has increased 2.3%, underpinned by selling price increases taken in response to cost pressures from rising commodity input costs. It expects its earnings per share for the six months ended 31 December 2021, including capital gains and losses, to increase between 5.5% and 7.5% over the prior year, translating into an increase from last year’s 296.60c to a range of between 313.00c and 318.90c per share.
- ArcelorMittal South Africa Ltd (JO:ACLJ): The steel company, in its FY21 trading statement, stated that its EPS is expected to improve from a loss per share of R1.80 for the comparative period to a profit within a range of R5.80 and R6.10 per share for the period. The HEPS is expected to improve from a headline loss per share of R1.90 for the comparative period to a headline profit per share within a range of R6.00 and R6.30 for the period.
- Cashbuild Limited (JO:CSBJ): The retail company, in its operational update for the 2Q22 period ended 26 December 2021, indicated that its revenue was down 11.0% on the comparative period. For the 305 existing stores (in existence prior to July 2020), revenue decreased by 13.0%, while the 12 new stores contributed 2.0%. This, combined with the results reported in the first quarter, equates to a decrease in revenue for the half year of 12.0% compared to the prior half year.
- Trencor Limited (JO:TREJ): The investment holding company, in its FY21 trading statement, stated that it expects basic loss and headline loss per share for the current period to be between 0.00c and 2.00c as compared to the reported basic loss and headline loss per share of 22.00c for the year ended 31 December 2020. This represents a positive change of between 100.0% and 91.0%.
- Dis-Chem (JO:DCPJ) acquires three leased distribution centres: Pharmacy group Dis-Chem has acquired three of five distribution centres that it now leases for more than R3.70mn from companies owned by Directors, previous Directors and shareholders in a bid to reduce rental expenses.