SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red yesterday, amid concerns over the Delta strain of the coronavirus infection.
- ·Real estate stocks, Accelerate Property Fund, Capital & Counties Properties and Hyprop Investments declined 3.0%, 2.0% and 0.7%, respectively.
- Financial services companies, Liberty Holdings and Sanlam (JO:SLMJ) shed 1.6% and 0.8%, respectively.
- Mining companies, Pan African Resources, BHP Group (JO:BHPJ) and Anglo American (JO:AMSJ) dropped 1.5%, 1.1% and 0.6%, respectively.
- On the flipside, telecommunications companies, Telkom SA SOC Ltd (OTC:TLKGY) and MTN (JO:MTNJ) Group advanced 2.7% and 2.2%, respectively.
- Banking stocks, FirstRand (JO:FSRJ), Capitec Bank Holdings (JO:CPIJ) and Standard Bank Group (JO:SBKJ) gained 1.2%, 0.6% and 0.2%, respectively.
- The JSE All Share index declined 0.5% to close at 66,248.74.
- The UK market finished weaker yesterday, as a surge in domestic COVID-19 cases dampened investor sentiment.
- Insurance companies, Prudential (LON:PRU), Aviva (LON:AV) and Legal & General Group (LON:LGEN) shed 3.6%, 1.2% and 1.2%, respectively.
- Home builders, Taylor Wimpey (LON:TW), Barratt Developments (LON:BDEV) and Persimmon (LON:PSN) declined 2.0%, 1.5% and 0.8%, respectively.
- Mining companies, Fresnillo (LON:FRES), BHP Group and Antofagasta (LON:ANTO) dropped 1.9%, 1.0% and 0.9%, respectively.
- Financial services companies, Standard Life (LON:SLA) Aberdeen, Schroders (LON:SDR) and Hargreaves Lansdown (LON:HRGV) lost 1.2%, 1.0% and 0.5%, respectively.
- On the flipside, retailers, J Sainsbury (OTC:JSAIY) and Next gained 1.1% and 0.4%, respectively.
- The FTSE 100 index declined 0.7% to close at 7,037.47.
US MARKET REVIEW
- US markets ended mostly higher yesterday, buoyed by gains in financial sector stocks.
- Wells Fargo (NYSE:WFC), JPMorgan Chase (NYSE:JPM) and American Express (NYSE:AXP) added 1.1%, 0.9% and 0.6%, respectively.
- Conoco Phillips rose 3.1%, after the company announced an increase of $1.00bn to its share buyback programme for 2021.
- General Mills (NYSE:GIS) climbed 1.5%, despite reporting a drop in its sales as consumers shifted their spending to restaurants.
- On the flipside, technology firms, Intel (NASDAQ:INTC), salesforce.com and Microsoft (NASDAQ:MSFT) shed 1.1%, 0.6% and 0.2%, respectively.
- The S&P 500 index rose 0.1% to settle at 4,297.50, while the DJIA index advanced 0.6% to close at 34,502.51.
- The NASDAQ index eased 0.2% to end the trading session at 14,503.95.
ASIA MARKET REVIEW
- Asian markets are trading lower this morning after data indicated that manufacturing activity grew at a slower pace in China in June.
- In Hong Kong, equity markets remain closed on account of a public holiday.
- In Japan, transport company, Mitsui O.S.K. Lines, (T:9104) has dropped 4.3%. However, electronics company, Citizen Watch (OTC:CHCLY) has added 1.5%.
- In South Korea, electronics company, LG Electronics (KS:066570) had shed 1.5%.
- However, automobile parts manufacturer, Jico (KS:010580) Company has surged 29.7%.
- Yesterday, the Hang Seng index declined 0.6% to settle at 28,827.95.
- Today, the Nikkei 225 index is trading 0.5% lower at 28,657.55. while the Kospi index is trading 0.4% weaker at 3,283.34.
COMMODITIES
- At 06:00 SAST today, Brent spot prices rose 0.5% to trade at $75.46/bl, ahead of a key OPEC+ meeting.
- Yesterday, Brent spot prices rose 0.1% to settle at $75.12/bl, after the US Energy Information Administration (EIA) reported that US crude inventories fell by 6.70mn bls to 452.30mn bls for the week ended 25 June. Meanwhile, an internal OPEC report indicated that the oil market would be in a deficit in the short term but a glut was on the horizon once the OPEC+ supply cuts ended.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 5.3% to $6.97/bushel.
- At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,774.27/oz. Yesterday, gold gained 0.5% to close at $1,770.11/oz, despite gold prices hovering around a two-month low, ahead of the release of key US jobs data.
- Yesterday, copper rose 0.4% to close at $9,351.50/mt. Aluminium closed 1.1% lower at $2,509.50/mt.
CURRENCIES
- Yesterday, the South African rand strengthened against the US dollar, after data indicated that the country recorded a larger-than-expected trade surplus for the month of May, as exports rose, and imports fell. In the US, private-sector employment increased more than expected in June. Meanwhile, pending home sales rose strongly in May to the highest level recorded for that month since 2005.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.42%. Further, the yield on 2023 bond advanced to 5.25% while that for the longer-dated 2030 issue fell to 8.88%.
- At 06:00 SAST, the US dollar is trading marginally higher against the South African rand at R14.2914, while the euro is trading 0.1% lower at R16.9337. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R19.7420.
- Yesterday, the euro declined against most of the major currencies. Meanwhile, German unemployment fell further in June, as more workers joined the labour market in light of a strong recovery in Europe’s largest economy helped by falling coronavirus infections and an easing of containment measures. Meanwhile, eurozone inflation eased in June.
- At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1849, while it has gained 0.1% against the British pound to trade at GBP0.8577.
ECONOMIC UPDATES
- Trade surplus in South Africa rose to R54.60bn in May, compared to a trade surplus of R51.30bn in the previous month. Markets were expecting the nation to post a trade surplus of R46.50bn.
- On an annual basis, in the UK, the final gross domestic product (GDP) dropped 6.1% in 1Q 2021, meeting market expectations of a drop of 6.1%. The preliminary figures had also recorded a fall of 6.1%. In the prior quarter, GDP had fallen 7.3%.
- The flash consumer price index (CPI) in Italy advanced 0.1% on a monthly basis in June, less than market expectations for a rise of 0.2%. In the prior month, the CPI had recorded a steady reading 0.0%.
- In June, on a MoM basis, the flash CPI (ex-tobacco) in France rose 0.2%, compared to an advance of 0.3% in the prior month. Market anticipations were for the CPI (ex-tobacco) to rise 0.2%.
- On a monthly basis, the PPI registered a rise of 0.5% in May, in France. The PPI had fallen by a revised 0.8% in the prior month.
- On a MoM basis, consumer spending in France rose 10.4% in May, compared to a revised fall of 8.70% in the previous month. Market expectations were for consumer spending to climb 7.5%.
- In June, the number of people unemployed fell 38.00K in Germany, compared to a revised drop of 19.00 K in the previous month. Markets were expecting the number of people unemployed to drop 20.00K.
- The flash CPI in the eurozone recorded a rise of 0.3% in June, on a MoM basis. In the prior month, the CPI had risen 0.3%.
- The flash core CPI rose 0.9% on a YoY basis in June, in the eurozone, meeting market expectations of a rise of 0.9%. In the prior month, the core CPI had recorded a rise of 1.0%.
- The Chicago Fed purchasing managers index recorded a drop to 66.10 in June, in the US, more than market expectations for a drop to a level of 70.00. The Chicago Fed purchasing managers index had registered a level of 75.20 in the previous month.
- Pending home sales in the US climbed 8.0% on a MoM basis in May, compared to a drop of 4.4% in the previous month. Markets were anticipating pending home sales to drop 0.8%.
- In April, the GDP slid 0.3% on a monthly basis in Canada, less than market expectations for a fall of 0.8%. In the previous month, the GDP had climbed by a revised 1.3%.
- The Tankan large manufacturing index in Japan rose to a level of 14.00 in 2Q21, lower than market expectations of a rise to 15.00. The Tankan large manufacturing index had registered a level of 5.00 in the previous quarter.
- The final manufacturing PMI eased to 52.40 in June, in Japan, compared to a level of 53.00 in the prior month. The preliminary figures had recorded a drop to 51.50.
- The consumer confidence index recorded a rise to 37.40 in June, in Japan. The consumer confidence index had recorded a reading of 34.10 in the previous month.
- In May, on a YoY basis, housing starts in Japan recorded a rise of 9.9%, compared to an advance of 7.1% in the prior month. Markets were anticipating housing starts to advance 8.3%.
- The NBS manufacturing PMI in China fell to a level of 50.90 in June. Markets were expecting the NBS manufacturing PMI to fall to a level of 50.80.
- The NBS non-manufacturing PMI fell to a level of 53.50 in June, in China. The NBS non-manufacturing PMI had registered a reading of 55.20 in the previous month.
- In June, Caixin/Markit manufacturing PMI index in China registered a drop to 51.30, compared to a level of 52.00 in the prior month. Markets were expecting Caixin/Markit manufacturing PMI index to ease to a level of 51.80.
CORPORATE UPDATES
SOUTH AFRICA
- Compagnie Financière Richemont SA (JO:CFRJ): The luxury goods holding company announced that it has acquired 100.0% of Delvaux, the renowned Belgian luxury leather goods Maison, in a private transaction.
- ArcelorMittal South Africa Limited (JO:ACLJ) South Africa Limited: The steel company, in its 1H21 trading statement, revealed that it expects its HEPS to increase by at least R4.15 from a headline loss per share of R2.39 in the corresponding previous year, to a headline profit per share of R1.76 for the current year. Its EPS is expected to increase by at least R3.68 from a loss per share of R2.11 in the corresponding previous year to a profit per share of R1.57 for the current year.
- Net 1 UEPS Technologies Inc (JO:NT1J): The technology company announced the appointment of Chris Meyer as Group Chief Executive Officer (CEO) as of 1 July 2021.
- Trustco Group Holdings(JO:TTOJ) (JO:TTOJ): The insurance company, in its 1H21 trading statement, indicated that its revenue increased 47.0%, compared with the previous year. Its basic loss per share stood at 13.28c, compared to the loss per share of 6.61c recorded in the corresponding period.
- Aveng Ltd(JO:AEGJ) (JO:AEGJ): The construction company, in its 2H21 trading statement, stated that the company’s previous positive performance has continued into the 2H21 period, with improved revenue and earnings before interest and tax and whilst cash flow was negative, it was in line with the plan for the second half. Also, it remains strongly positive for both the full year and in comparison to the prior year.
- Accelerate Property Fund Ltd(JO:APFJ) (JO:APFJ): The real estate investment company, in its FY21 results, stated its revenue stood at R742.67mn compared to R1,085.62mn recorded in the previous year. Diluted loss per share stood at 72.85c compared to 86.54c recorded in the last year.
- Delta Property Fund Ltd(JO:DLTJ) (JO:DLTJ): The real estate company, in its FY21 results, revealed that its revenue stood at R1.41bn compared to R1.46bn recorded in the previous year. Diluted loss per share stood at 63.63c compared to 131.02c recorded in the last year. No dividends were declared during the 2021 financial year.
- Specialist tech group Etion returns to profitability after portfolio shake-up: Specialist technology group Etion, which returned to profitability after a shake-up of its portfolio that included the closure of unprofitable businesses, has signed a contract with an international customer to deliver a tactical navigation system.