SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red on Friday, amid concerns over the increasing third wave of coronavirus infections in the country.
- Gold miners, Harmony Gold Mining, Gold Fields (JO:GFIJ) and AngloGold Ashanti (JO:ANGJ) shed 2.5%, 2.2% and 2.1%, respectively.
- Retailers, Cie Financiere Richemont SA (JO:CFRJ) and Mr Price Group (JO:MRPJ) declined 1.6% and 1.4%, respectively.
- On the flipside, resource miners, Kumba Iron (JO:KIOJ), Anglo American (JO:AMSJ) and Exxaro (JO:EXXJ) Resources gained 3.0%, 2.0% and 1.9%, respectively.
- Banking firms, FirstRand (JO:FSRJ), Capitec Bank (JO:CPIJ) and Nedbank rose 1.2%, 0.9% and 0.5%, respectively.
- The JSE All Share index declined 0.1% to close at 66,215.47.
- The UK market finished firmer on Friday, buoyed by gains in mining sector stocks and as the US bipartisan infrastructure agreement boosted investor sentiment.
- BHP Group (JO:BHPJ), Anglo American and Rio Tinto (LON:RIO) gained 2.1%, 1.5% and 1.0%, respectively.
- JD Sports Fashion jumped 4.4%, amid reporting robust 4Q21 revenue results and guidance.
- Building materials company, CRH (LON:CRH) and equipment rental company, Ashtead Group (LON:AHT) added 2.1%, each, amid reports of an infrastructure deal.
- On the flipside, airlines company, International Consolidated Airlines Group (LON:ICAG) SA and hotel group, InterContinental Hotels Group shed 2.5% and 1.2%, respectively, as the UK government added more places to its red list.
- The JSE All Share index declined 0.1% to close at 66,215.47.
US MARKET REVIEW
- US markets ended mostly higher on Friday, as the release of robust economic data and a domestic infrastructure spending agreement buoyed investor morale.
- Nike (NYSE:NKE) surged 15.5% after the company raised its FY22 sales forecast. CarMax (NYSE:KMX) soared 6.7%, after the company reported better than expected 1Q22 results.
- Banking firms, Bank of America (NYSE:BAC), JP Morgan Chase (NYSE:JPM) and Citigroup (NYSE:C) added 1.9%, 1.0% and 0.3%, respectively, after the US Federal Reserve (Fed) declared that the banks have cleared the stress test.
- On the flipside, BlackBerry (NYSE:BB) shed 4.4%, even after the company reported a lower-than-expected adjusted 1Q22 loss and sales.
- The S&P 500 index rose 0.3% to settle at 4,280.70, while the DJIA index advanced 0.7% to close at 34,433.84.
- The NASDAQ index eased 0.1% to end the trading session at 14,360.39.
ASIA MARKET REVIEW
- Asian markets are trading lower this morning, amid continued surge in the coronavirus infections in Asia.
- Meanwhile, Chinese industrial profits rose at a slower pace in May.
- In Hong Kong, morning trading sessions of both the securities and derivatives markets, including Stock Connect trading, was suspended due to a black rainstorm warning.
- In Japan, Konami Holdings (OTC:KNMCY) has shed 2.1%.
- In South Korea, electronics company, LG Electronics (KS:066570) had shed 1.5%. Meanwhile, peer, Samsung Electronics (KS:005930) has added 0.3%.
- On Friday, the Hang Seng index advanced 1.4% to settle at 29,288.22.
- Today, the Nikkei 225 index is trading 0.1% lower at 29,045.30, while the Kospi index is trading 0.1% lower at 3,299.56.
COMMODITIES
- At 06:00 SAST today, Brent spot prices fell 0.2% to trade at $75.66/bl, amid disputes over the Iranian nuclear deal.
- On Friday, Brent spot prices rose 0.7% to settle at $75.78/bl, amid hopes of fuel oil demand to surpass supply with OPEC+ increasing its crude output from August. Baker Hughes data reported that the number of active US oil drilling rigs fell by 1 to 372 for the week ended 25 June. Meanwhile, negotiations over the revival of Iran's nuclear deal are expected to resume in coming days, as a monitoring agreement between Tehran and the U.N. nuclear watchdog lapsed last week.
- On Friday, the Illinois North Central No.2 Yellow corn spot prices fell 3.4% to $6.17/bushel.
- At 06:00 SAST today, gold prices declined 0.1% to trade at $1,779.61/oz. On Friday, gold gained 0.4% to close at $1,781.44/oz, as the US infrastructure deal retreated the dollar.
- On Friday, copper marginally declined to close at $9,388.40/mt. Aluminium closed 2.0% higher at $2,467.25/mt.
CURRENCIES
- On Friday, the South African rand strengthened against the US dollar. In the US, the Boston Fed Bank President, Eric Rosengren stated that it is possible that the US economy could reach the conditions on maximum employment and inflation that would merit an interest rate increase next year. On the data front, the core personal consumption data remained steady in May, amid semiconductor shortages, despite an increase in demand for services like restaurants and hotels amid a reopening economy. The Michigan consumer sentiment index rose in June, buoyed by an improving economic outlook among households. Personal income fell in May, weighed down by drop in transfer payments from the US government.
- The yield on benchmark government bonds rose on Friday. The yield on 2026 bond rose to 7.43%. Further, the yield on 2023 bond advanced to 5.20%, while that for the longer-dated 2030 issue rose to 8.96%.
- At 06:00 SAST, the US dollar is trading 0.2% higher against the South African rand at R14.1726, while the euro is trading marginally lower at R16.8971. At 06:00 SAST, the British pound has gained 0.2% against the South African rand to trade at R19.6763.
- On Friday, the euro advanced against most of the major currencies, after the consumer confidence Index in Germany rose more than expected in July, following an increase in spending by consumers on shopping, amid easing in lockdown restrictions on account of a fall in the number of COVID-19 cases.
- At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1924, while it has weakened 0.1% against the British pound to trade at GBP0.8589.
ECONOMIC UPDATES
- The CBI distributive trade survey's retail sales balance registered an unexpected rise to 25.0% in June, in the UK. In the prior month, the CBI distributive trade survey's retail sales balance had registered a reading of 18.0%.
- The producer price index (PPI) rose 1.6% on a MoM basis in Spain, in May. In the prior month, the PPI had registered a revised rise of 3.0%.
- In Italy, the economic sentiment index advanced to 112.80 in June, compared with a revised level of 107.30 in the prior month.
- The business confidence index rose to a level of 114.80 in June, in Italy, compared with a revised reading of 110.90 in the prior month. Markets were anticipating the business confidence index to advance to a level of 112.00.
- The consumer confidence index advanced to 115.10 in June, in Italy, compared with a level of 110.60 in the prior month. Markets were expecting the consumer confidence index to advance to 112.00.
- The consumer confidence index in Germany recorded a rise to -0.30 in July, compared with a revised reading of -6.90 in the prior month. Markets were expecting the consumer confidence index to climb to -4.00.
- On a monthly basis in the US, core personal consumption expenditure registered a rise of 0.5% in May, less than market expectations for an advance of 0.6%. Core personal consumption expenditure had risen 0.7% in the prior month.
- In May, on a monthly basis, personal income in the US registered a drop of 2.0%, less than market expectations for a drop of 2.5%. In the prior month, personal income had dropped 13.10%.
- In June, the final Reuters/Michigan consumer sentiment index in the US climbed to 85.50, compared with a reading of 82.90 in the prior month. The preliminary figures had recorded an advance to 86.40. Markets were expecting the Reuters/Michigan consumer sentiment index to rise to a level of 86.50.
CORPORATE UPDATES
SOUTH AFRICA
- JSE Limited (JO:JSEJ): The capital market company, in its 1H21 trading statement, reported that its EPS is expected to be between 386.99c and 432.52c, compared with 569.10c recorded in the corresponding period of the previous year. It also expects its HEPS to be between 386.92c and 432.44c compared with 569.00c recorded in prior corresponding period.
- Hudaco (JO:HDCJ) Industries Limited: The industrial supplies company, in its 1H21 results, indicated that its revenue rose to R3.38bn from R2.64bn posted in the corresponding period of the previous year. Its basic EPS increased 193.1% from the same period of the prior year to 686.00c.
- Ascendis Health (JO:ASCJ) Limited: The pharma company announced the disposal of the Group’s 49.0% interest in Farmalider, S.A for a cash consideration equal to EUR4.97mn. As part of the disposal, Ascendis Pharma will gain indefinite and exclusive access to Farmalider’s portfolio of products for 14 Southern (NYSE:SO) African Development Community countries and 11 other African countries.
- Oil edges higher with OPEC+ output talks in the spotlight: oil prices rose, heading for a fifth straight week of gains, with demand growth seen outstripping supply on bets that OPEC+ producers will be cautious in returning more output to the market from August.