Market Review, Corporate Updates, Commodities & Currencies Inbox - 10.06.21

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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, buoyed by gains in real estate and banking sector stocks.
  • Real estate company, Vukile Property Fund Ltd (JO: VKEJ ) surged 7.8%, after the company reported an improvement in its FY21 foot traffic at its shopping centres, despite a significant decline in its net rental income.
  • Peer, Octodec Investments advanced 2.3%.
  • Banking companies, Nedbank Group (JO: NEDJ ), Capitec Bank Holdings (JO: CPIJ ) and FirstRand (JO: FSRJ ) rallied 4.4%, 3.0% and 2.2%, respectively.
  • On the flipside, miners, BHP Group (JO: BHPJ ), Kumba Iron Ore and African Rainbow Minerals (JO: ARIJ ) declined 1.9%, 1.5% and 1.1%, respectively.
  • The JSE All Share index advanced 0.1% to close at 67,681.47.

UK MARKET REVIEW

  • The UK market finished weaker yesterday, pulled down by losses in banking and mining sector stocks and on concerns about rising inflation.
  • Banking firms, Barclays (LON: BARC ), Lloyds Banking Group (LON: LLOY ) and Standard Chartered (LON: STAN ) declined 2.5%, 1.4% and 1.2%, respectively.
  • Miners, BHP Group, Antofagasta (LON: ANTO ) and Fresnillo (LON: FRES ) declined 2.1%, 1.8% and 1.1%, respectively.
  • On the flipside, airline company, International Consolidated Airlines Group (LON: ICAG ) rose 3.3%, after the US Centers for Disease Control and Prevention eased travel restrictions for more than 100 countries for vaccinated people.
  • Pharmaceuticals companies, AstraZeneca (LON: AZN ), GlaxoSmithKline (LON: GSK ) and Hikma Pharmaceuticals (LON: HIK ) advanced 2.5%, 2.1% and 1.2%, respectively.
  • The FTSE 100 index declined 0.2% to close at 7,081.01.

US MARKET REVIEW

  • US markets ended lower yesterday, amid cautious investor sentiment ahead of the release of the US inflation data .
  • Campbell Soup (NYSE: CPB ) plunged 6.5%, after it reported lower than expected 3Q21 revenue and earnings.
  • United Parcel Service (NYSE: UPS ) dropped 4.2%.
  • Meanwhile, the delivery company issued its financial targets for FY23 as well as its long-term ESG targets.
  • Target (NYSE: TGT ) declined 1.3even after the company raised its 3Q21 dividend and reported consumer growth during the period.
  • On the upside, GameStop (NYSE: GME ) added 0.9%.
  • The S&P 500 index fell 0.2% to settle at 4,219.55, while the DJIA index declined 0.4% to close at 34,447.14.
  • The NASDAQ index eased 0.1% to end the trading session at 13,911.75.

ASIA MARKET REVIEW

  • Asian markets are trading higher this morning, on prospects of economic re-openings and ahead of the release of key US inflation data.
  • In Japan, Eisai has plunged 8.3%. Kospi
  • On the other hand, Shionogi & Company (T: 4507 ) has gained 4.4%, after reports indicated that the firm plans to mass-produce its own COVID-19 vaccine.
  • Moreover, Chugai Pharmaceutical (T: 4519 ) and Ono Pharmaceutical (T: 4528 ) have advanced 2.0% and 1.5%, respectively, after reports indicated that the companies will receive government subsidies for their research on COVID-19 drugs.
  • In Hong Kong, restaurant company, Haidilao International Holding (HK: 6862 ) has declined 3.9%.
  • In South Korea, technology company, LG Electronics (KS: 066570 ) has added 0.7%. The Nikkei 225 index is trading 0.3% higher at 28,948.87.
  • The Hang Seng index is trading 0.3% higher at 28,819.71, while the index is trading 0.5% firmer at 3,231.40.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices fell 0.6% to trade at $71.09/bl, extending the previous session’s losses.
  • Yesterday, Brent spot prices fell 0.2% to settle at $71.52/bl. The Energy Information Administration reported that US crude inventories fell by 5.20mn bls for the week ended 4 June. Meanwhile, Libya's Waha Oil Company aims to return to normal output operations after fixing a leak on a pipeline that more than halved the company's oil production.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 1.6% to $6.96/bushel.
  • At 06:00 SAST today, gold prices declined 0.1% to trade at $1,887.00/oz. Yesterday, gold declined 0.2% to close at $1,888.57/oz, as investors expressed caution ahead of the release of key US economic data and the European Central Bank’s monetary policy meeting.
  • Yesterday, copper rose 0.2% to close at $9,952.75/mt. Aluminium closed 0.7% higher at $2,470.30/mt.

CURRENCIES

  • Yesterday, the South African rand weakened against the US dollar. Meanwhile, in South Africa, business confidence rose to its highest point in about six years in 2Q21, pointing towards the continued recovery of the economy after its record contraction in 2020. Meanwhile, in the US, wholesale inventories increased in April as businesses replenished stocks to meet pent-up demand.
  • The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.12%. Further, the yield on 2023 bond advanced to 5.01%, while that for the longer-dated 2030 issue fell to 8.67%.
  • At 06:00 SAST, the US dollar is trading marginally higher against the South African rand at R13.7378, while the euro is trading 0.1% lower at R16.7158. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R19.3888.
  • Yesterday, the euro advanced against most of the major currencies, after German trade surplus widened in April, due to an increase in exports, prompted by expanding trade with the US, suggesting towards a continued recovery in Europe’s biggest economy.
  • At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.2167, while it has weakened 0.1% against the British pound to trade at GBP0.8621.

ECONOMIC UPDATES

  • In 2Q21, the business confidence index climbed to 50.00 in South Africa. The business confidence index had recorded a reading of 35.00 in the previous quarter.
  • The seasonally adjusted trade surplus in Germany dropped to EUR15.50bn in April, from a trade surplus of EUR20.20bn in the previous month.
  • On a monthly basis, the seasonally adjusted final wholesale inventories in the US registered a rise of 0.8% in April, at par with market expectations of a rise of 0.8%. The preliminary figures had also recorded a rise of 0.8%. The wholesale inventories had registered a rise of 1.3% in the prior month.
  • The Bank of Canada kept its interest rate steady at 0.25%, at par with market expectations of 0.25%.
  • The preliminary machine tool orders recorded a rise of 140.7% on an annual basis in Japan, in May. Machine tool orders had risen 120.8% in the previous month.
  • Compared to a reading of 3.5% in the prior month, the consumer inflation expectations in Australia advanced to 4.4% in June.

CORPORATE UPDATES

SOUTH AFRICA

  • Vukile Property Fund Ltd (JO: VKEJ ): The real estate investment trust company, in its FY21 results, indicated that its property revenue fell to R3.12bn from that posted in the previous year. Its diluted EPS stood at 61.04c, compared with a loss per share of 10.81c recorded in the prior year. The company has declared a cash dividend of 101.04c per share due to be paid in July 2021.
  • PPC Limited (JO: PPCJ ): The cement company, in its FY21 trading statement, stated that it expects its EPS to be between 10.00c and 15.00c compared with a loss per share of 124.00c recorded in the previous year. Its headline loss per share is expected to be between 13.00c to 18.00c, compared with a HEPS of 27.00c in the previous year. Further, a binding sale and purchase agreement has been entered into between PPC Botswana Proprietary Limited (a wholly-owned subsidiary of PPC) and a construction and mining company in Botswana, to sell PPC’s 100.0% shareholding in PPC Aggregate Quarries Botswana Proprietary Limited for a cash purchase consideration of Pula 47.50mn.
  • Recovery in fuel demand lifts oil: Oil prices rose for a second session on signs of strong fuel demand in western economies, while the prospect of Iranian supplies returning faded as the US secretary of state said sanctions against Tehran were unlikely to be lifted.

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