Market Review, Corporate Updates, Commodities & Currencies

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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, buoyed by gains in mining sector stocks.
  • However, gains were capped amid cautious investor sentiment on expectations of an interest rate hike by the US Federal Reserve (Fed).
  • Gold miners, Sibanye Stillwater (JO: SSWJ ), Harmony Gold Mining and AngloGold Ashanti (JO: ANGJ ) surged 7.1%, 4.7% and 3.8%, respectively.
  • Platinum miners, Northam (JO: NHMJ ) Platinum Holdings, Impala Platinum (JO: IMPJ ) Holdings and Anglo American (JO: AMSJ ) Platinum soared 6.1%, 4.7% and 1.1%, respectively.
  • On the contrary, real estate sector stocks, Delta Property Fund (JO: DLTJ ), Arrowhead Properties and Capital & Counties Properties plunged 5.3%, 4.1% and 1.5%, respectively.
  • Telecommunication companies, Telkom (JO: TKGJ ) SA SOC, MTN (JO: MTNJ ) Group and Blue Label Telecoms shed 2.9%, 2.3% and 1.9%, respectively.
  • The JSE All Share index advanced 0.2% to close at 73,971.43.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, buoyed by gains in retail sector stocks and as investors look past concerns over the prospects of a tighter monetary policy.
  • Next (LON: NXT ), JD Sports Fashion (LON: JD ) and Just Eat Takeaway (LON: JETJ ) advanced 4.5%, 2.8% and 2.2%, respectively.
  • Mining sector stocks, Fresnillo (LON: FRES ), Rio Tinto (LON: RIO ) and BHP Group (JO: BHPJ ) rose 2.6%, 1.9% and 0.6%, respectively.
  • On the flipside, consumer goods companies, Reckitt Benckiser Group (LON: PSN ) and Unilever (LON: ULVR ) shed 1.5% and 0.6%, respectively.
  • Chemicals companies, Croda International (LON: CRDA ) and Johnson Matthey (LON: JMAT ) dropped 1.0% and 0.6%, respectively.
  • Real estate property companies, British Land (LON: BLND ) Company and Land Securities Group (LON: LAND ) eased 1.0% and 0.7%, respectively.
  • The FTSE 100 index advanced 0.6% to close at 7,491.37.

US MARKET REVIEW

  • US markets ended higher yesterday, after the Fed Chairman, Jerome Powell affirmed that the central bank’s monetary policy change should not have a negative impact on the domestic job market.
  • American Airlines (NASDAQ: AAL ) Group gained 1.2%, after the airline company updated its earnings outlook for 4Q21.
  • Diversified conglomerate, Danaher Corporation (NYSE: DHR ) added 0.8%, after the company announced that it expects its 4Q21 core revenue growth to be more than its expectations, driven by better-than-expected results at all three of its operating segments.
  • The S&P 500 index rose 0.9% to settle at 4,713.07, while the DJIA index advanced 0.5% to close at 36,252.02.
  • The NASDAQ index climbed 1.4% to end the trading session at 15,153.45.

ASIA MARKET REVIEW

  • Asian markets are trading higher this morning, tracking overnight gains on Wall Street.
  • On the economic data front, Chinese inflation fell more than expected in December.
  • In Japan, financial services company, SoftBank Group Corporation (T: 9984 ) has soared 5.2%. On the other hand, Shinsei Bank has dropped 1.6%.
  • In Hong Kong, delivery company, Meituan (HK: 3690 ) has jumped 7.4%.
  • On the contrary, pharmaceutical company, Sino Biopharmaceutical (HK: 1177 ) has shed 1.6%.
  • In South Korea, electronics company, LG Electronics (KS: 066570 ) has surged 5.4%.
  • On the flipside, SsangYong Motor (KS: 003620 ) has plummeted 19.2%.
  • The Nikkei 225 index is trading 1.8% higher at 28,736.92.
  • The Hang Seng index has advanced 2.1% to trade at 24,248.12, while the Kospi index is trading 1.4% higher at 2,968.78.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices marginally fell to trade at $83.68/bl, reversing previous session’s gains.
  • Yesterday, Brent spot prices rose 3.2% to settle at $83.69/bl, buoyed by a drop in US crude oil inventories, which indicated towards tighter supply. Also, prices were boosted amid hopes among investors that the Omicron variant of coronavirus would not impact the global crude oil rebound. Meanwhile, the American Petroleum Institute (API) reported that crude oil inventories declined by 1.10mn bls for the week ended 7 January. Moreover, China's CNOOC (HK: 0883 ) has set its 2022 oil production target at 10.0% above its last year's goal. The company expects its domestic crude oil output to hit a plateau by 2030 and domestic natural gas by 2035 in line with China's peak fuel demand.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.2% to $5.85/bushel.
  • At 06:00 SAST today, gold prices declined 0.2% to trade at $1,818.29/oz. Yesterday, gold gained 1.1% to close at $1,821.60/oz, as a weaker greenback boosted demand for the safe haven yellow metal.
  • Yesterday, copper rose 1.7% to close at $9,734.50/mt. Aluminium closed 1.4% higher at $2,959.25/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In the US, Fed Chairman, Jerome Powell stated that the central bank would be able to raise its interest rates without harming the job market. The Fed has outlined a plan to raise its benchmark interest rate to 2.1% by the end of 2023. Meanwhile, former New York Fed President, William Dudley and other policymakers think that the central bank will likely have to push its benchmark rate up closer to 4.0% to reverse easy monetary policy largely kept in place due to the COVID-19 pandemic. Kansas City Fed President, Esther George said that the central bank should speedily reduce its enormous $8.50tn pile of bond holdings to help curb inflation which is the highest in almost 40 years and discourage undue risk-taking.
  • The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.88%. Further, the yield on 2023 bond declined to 5.15%, while that for the longer-dated 2030 issue rose to 9.51%.
  • At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R15.5035, while the euro is trading 0.1% lower at R17.6345. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R21.154.
  • Yesterday, the euro declined against most of the major currencies. In the eurozone, the European Central Bank (ECB) President, Christine Lagarde stated that the central bank understands that rising prices are a concern, adding that people can trust that its commitment to price stability is steadfast, which is critical for the firm anchoring of inflation expectations and for confidence in the currency.
  • At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1375, while it has marginally weakened against the British pound to trade at GBP0.8337.

ECONOMIC UPDATES

  • The seasonally adjusted manufacturing production index registered a rise of 3.7% on a MoM basis in South Africa, in November. In the prior month, the manufacturing production index had dropped 5.9%.
  • On a YoY basis, the unadjusted industrial output recorded a rise of 5.6% in Spain, in November. In the prior month, the unadjusted industrial output had fallen by a revised 3.2%.
  • The seasonally adjusted retail sales eased 0.4% in Italy on a monthly basis, in November. Retail sales had climbed by a revised 0.2% in the previous month.
  • In December, the small business optimism index in the US recorded a rise to 98.90. The small business optimism index had recorded a reading of 98.40 in the previous month.
  • The non-seasonally adjusted current account surplus in Japan dropped to JPY897.30bn in November. Japan had registered a current account surplus of JPY1,180.10bn in the prior month.
  • On a YoY basis, the consumer price index (CPI) in China recorded a rise of 1.5% in December, less than market expectations for an advance of 1.8%. The CPI had climbed 2.3% in the previous month.

CORPORATE UPDATES

SOUTH AFRICA

  • Anglo American Plc (JO: AGLJ ): The mining company announced the completion of the sale of its 33.3% shareholding in the Cerrejón joint venture to Glencore (LON: GLEN ) for a total cash consideration of approximately $294.00mn, based on an effective economic date of 31 December 2020. The completion of this transaction, that was first announced on 28 June 2021, marks the final stage of the company’s exit from thermal coal operations.
  • Brimstone Investment Corporation Limited (JO: BRTJ ): The investment holding company announced the acquisition by Sea Harvest, through its wholly owned Australian subsidiaries, Sea Harvest Pty Ltd and Sea Harvest Marine Pty Ltd, of the Western Australia based fishing and related businesses of MG Kailis Holdings Proprietary Limited and its subsidiaries for a purchase consideration of A$70.00mn, excluding transaction costs. The acquisition assets will be held in Sea Harvest Marine, which is a newly registered wholly owned subsidiary of Sea Harvest Australia.
  • Oil nears $84 as Omicron fears ease: Oil rose to nearly $84 a barrel, supported by tight supply and expectations that rising coronavirus cases and the spread of the Omicron variant will not derail a global demand recovery.

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