Market Review, Corporate Updates, Commodities & Currencies 20.07.21

  • Market Overview

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red yesterday, as concerns over rising cases of the Delta variant of coronavirus dampened investor sentiment.
  • Retail sector stocks, Cashbuild (JO: CSBJ ), Massmart Holdings (JO: MSMJ ) and Clicks (JO: CLSJ ) Group plunged 6.7%, 3.5% and 1.0%, respectively.
  • Tobacco company, British American Tobacco (JO: SNHJ ) shed 3.7%.
  • Mining stocks, Anglo American (JO: AMSJ ), BHP Group (JO: BHPJ ) and Exxaro (JO: EXXJ ) Resources dropped 3.6%, 3.4% and 2.8%, respectively.
  • Moreover, banking companies, Absa (JO: ABGJ ) Group, FirstRand (JO: FSRJ ) and Capitec Bank (JO: CPIJ ) Holdings declined 2.3%, 2.0% and 1.9%, respectively.
  • On the flipside, real estate sector stocks, Attacq (JO: ATTJ ) and Dipula Income Fund (JO: DIBJ ) rose 1.8% and 1.1%, respectively.
  • The JSE All Share index declined 2.6% to close at 64,804.74.

UK MARKET REVIEW

  • The UK market finished weaker yesterday, amid concerns about a slowdown in domestic economic growth, on account of a persistent surge in coronavirus infections.
  • Travel and leisure sector stocks, International Consolidated Airlines Group (LON: ICAG ) SA, InterContinental Hotels Group (LON: IHG ) and Whitbread (LON: WTB ) plummeted 5.2%, 3.5% and 3.0%, respectively, on the back of news that people from France have to stay in quarantine in spite of being fully vaccinated.
  • AstraZeneca (LON: AZN ) dropped 0.4%, despite receiving approval from China for its drug to treat extensive-stage small cell lung cancer.
  • On the flipside, online food company, Just Eat Takeaway.com N.V. (LON: JETJ ) advanced 3.3%. Educational products company, Pearson (LON: PSON ) added 1.3%.
  • The FTSE 100 index declined 2.3% to close at 6,844.39.

US MARKET REVIEW

  • US markets ended lower yesterday, amid concerns over a spike in domestic COVID-19 cases and deteriorating relations between the US and China, with the latter being accused of hacking Microsoft (NASDAQ: MSFT ) Exchange’s email server software.
  • Technology companies, Apple (NASDAQ: AAPL ), Microsoft and Intel (NASDAQ: INTC ) shed 2.7%, 1.3% and 0.6%, respectively.
  • Cal-Maine (NASDAQ: CALM ) Foods dropped 3.8%, after the company reported a more than expected loss for 4Q21, following a decline in egg sales, as ease in pandemic restrictions made people prepare less meals at home.
  • On the other hand, AutoNation (NYSE: AN ) rose 3.7%, after reporting upbeat revenue and profits in 2Q21 as well as growth in used car sales.
  • The S&P 500 index fell 1.6% to settle at 4,258.49, while the DJIA index declined 2.1% to close at 33,962.04.
  • The NASDAQ index eased 1.1% to end the trading session at 14,274.98.

ASIA MARKET REVIEW

  • Asian markets are trading lower this morning, tracking overnight losses on Wall Street.
  • Meanwhile, China kept its lending rates unchanged for corporate and housing loans.
  • In Japan, oil company, Inpex (T: 1605 ) has shed 3.5%.
  • Meanwhile, optical products company, Canon Inc (T: 7751 ) has surged 8.3%.
  • In Hong Kong, Geely Automobile Holdings (HK: 0175 ) has plunged 5.7%.
  • On the flipside, public transport company, MTR Corporation has added 2.5%.
  • In South Korea, Cosmo Chemical has plummeted 6.8%. On the other hand, technology company, LG Electronics (KS: 066570 ) has added 1.9%.
  • The Nikkei 225 index is trading 0.8% lower at 27,431.55.
  • The Hang Seng index is trading 1.2% weaker at 27,165.46, while the Kospi index is trading 0.7% lower at 3,222.76.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices fell 0.3% to trade at $68.54/bl, extending the previous session’s losses.
  • Yesterday, Brent spot prices plunged 6.8% to settle at $68.74/bl, falling to its lowest level since March, after an OPEC+ agreement to raise crude oil output stoked fears among investors of oil surplus.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.1% to $6.34/bushel.
  • At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,816.92/oz. Yesterday, gold marginally gained to close at $1,812.64/oz. However, gains were capped on the back of a robust dollar.
  • Yesterday, copper declined 2.2% to close at $9,188.50/mt. Aluminium closed 2.5% lower at $2,405.00/mt.

CURRENCIES

  • Yesterday, the South African rand weakened against the US dollar, as rising Covid-19 cases impacted emerging market currencies.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.50%. Further, the yield on 2023 bond declined to 5.20%, while that for the longer-dated 2030 issue fell to 8.94%.
  • At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R14.5481, while the euro is trading 0.2% lower at R17.1590. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R19.9001.
  • Yesterday, the euro advanced against most of the major currencies. The Bank of England ( BoE ) interest-rate setter, Jonathan Haskel stated that the government support in the form of an increase in public spending and tax cuts have prevented major damages and that reducing it, on hopes of rise in inflation in the future, is not a right option. Further, he stated that inflation will exceed 3.0%, above the BoE’s estimates. Meanwhile, German Bundesbank stated that the German economy could accelerate more and reach pre pandemic levels, if there are no setbacks in the process to fight the pandemic and ease in the supply constrain.
  • At 06:00 SAST, the euro marginally slipped against the US dollar to trade at $1.1795, while it has weakened 0.1% against the British pound to trade at GBP0.8623.

ECONOMIC UPDATES

  • In July, on a monthly basis, the Rightmove house price index in the UK recorded a rise of 0.7%. In the previous month, the Rightmove house price index had advanced 0.8%.
  • In July, the housing market index in the US eased unexpectedly to 80.00. The housing market index had recorded a reading of 81.00 in the prior month.
  • On a YoY basis, the national consumer price index ( CPI) in Japan advanced 0.2% in June. In the prior month, the national CPI had registered a drop of 0.1%.
  • China kept its benchmark lending rate for corporate and household loans unchanged at 3.85%, despite growing expectations for a cut after a surprise lowering of bank reserve requirements.

CORPORATE UPDATES

SOUTH AFRICA

  • Ascendis Health (JO: ASCJ ) Limited: The healthcare company announced that a sale of shares agreement has been concluded between, inter alia, the company, Ascendis Health SA Holdings Proprietary Limited, a wholly owned subsidiary of the company, Acorn Agri & Food Limited, through its nominee, Sun Valley Estates Proprietary Limited and AAF Invest Proprietary Limited, a wholly-owned subsidiary of AAF, for the disposal of the entire issued share capital of the companies comprising the Ascendis Animal Health Division, being Ascendis Vet Proprietary Limited, Ascendis Animal Health Proprietary Limited and Kyron Prescriptions Proprietary Limited and Kyron Laboratories Proprietary Limited.
  • Woolworths (ASX: WOW ) Holdings Limited: The retail company, in its update on the impact of civil unrest on the company and its trading statement, revealed that all the stores in KZN as well as a number of stores in Gauteng last week had to be temporarily closed, prioritising the safety of its employees and customers. Eleven Woolworths stores have been looted and severely damaged with nine of the eleven stores in KZN and two in Gauteng. Although looters gained entry to the Woolworths Maxmead Distribution Centre (DC) in KZN, the infrastructure was not severely damaged and has been secured, together with its other DCs. Operations have resumed and the company has prioritized the provision of food into KZN. In its FY21 trading update, it revealed that group sales increased by 9.7% compared with the corresponding previous year and by 5.9% in constant currency terms.
  • Lewis Group Limited (JO: LEWJ ): The retail company, in its voluntary update on the impact of civil unrest on the group, revealed that a total of 58 stores were looted and damaged and are currently not able to trade, including 54 stores in the ‘traditional’ segment across the Lewis, Beares and Best Home & Electric brands and four UFO stores. At the height of the unrest last week, over 260 stores across the group were closed as a precautionary measure to ensure the safety of employees and customers, and to minimise losses. The group has SA Special Risk Insurance Association (SASRIA) cover for losses arising from riot action.
  • Oil falls sharply after Opec+ agrees to boost output: Oil prices fell sharply after Opec+ overcame internal divisions and agreed to boost output, sparking concerns about a crude surplus as Covid-19 infections rise in many countries.

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