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Market Review: Global Inflation Fears Dampened Investor Morale

Published 2022/05/09, 09:36
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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red on Friday, as global inflation fears dampened investor morale.
  • Platinum miners, Anglo American (JO:AMSJ) Platinum, Impala Platinum (JO:IMPJ) Holdings and Northam (JO:NHMJ) Platinum plunged 6.0%, 5.6% and 2.1%, respectively.
  • Retailers, Clicks (JO:CLSJ) Group, Cie Financiere Richemont (JO:CFRJ) S.A. and Cashbuild (JO:CSBJ) dropped 5.7%, 3.5% and 2.1%, respectively.
  • Financial companies, FirstRand (JO:FSRJ), Absa (JO:ABGJ) Group and Capitec Bank (JO:CPIJ) Holdings shed 4.1%, 2.8% and 1.5%, respectively.
  • Gold mining companies, AngloGold Ashanti (JO:ANGJ), Sibanye Stillwater (JO:SSWJ) and Gold Fields (JO:GFIJ) declined 3.9%, 3.7% and 2.2%, respectively.
  • Real estate companies, Attacq (JO:ATTJ), Emira Property Fund (JO:EMIJ) and Fortress REIT eased 1.8%, 1.5% and 1.1%, respectively.
  • The JSE All Share index declined 2.4% to close at 67,978.14.

UK MARKET REVIEW

  • The UK market finished weaker on Friday, dragged down by broad based losses in travel and leisure companies.
  • InterContinental Hotels Group (LON:IHG) declined 1.1%, even after it reported a 61.0% increase in its 1Q22 group revenue per available room and also stated that it had attained 82.0% of 2019's level.
  • Peers, International Consolidated Airlines Group (LON:ICAG) S.A. and Whitbread (LON:WTB) plummeted 8.3% and 1.9% respectively.
  • Retail companies, B&M European Value Retail S.A (LON:BMEB)., J Sainsbury (OTC:JSAIY) and Burberry Group (LON:BRBY) plunged 5.2%, 1.8% and 1.2%, respectively.
  • On the flipside, pharmaceutical company, Hikma Pharmaceuticals (LON:HIK) advanced 2.9%.
  • Miners, Fresnillo (LON:FRES) and Antofagasta (LON:ANTO) added 1.0% and 0.7%, respectively.
  • The FTSE 100 index declined 1.5% to close at 7,387.94.

US MARKET REVIEW

  • US markets ended lower on Friday, dragged down by a weaker jobs data for April. Cloudfare plummeted 15.7%.
  • Meanwhile, the cybersecurity company reported upbeat 1Q22 revenues, despite reporting less than expected in its bottom-line forecast for the current quarter.
  • Zillow Group shed 4.4%, after the company delivered lower than expected FY22 earnings forecast that reflected uncertainty facing the real-estate sector.
  • World Wrestling Entertainment fell 1.5%, even after it reported better than expected 1Q22 earnings and revenue.
  • The S&P 500 index fell 0.6% to settle at 4,123.34, while the DJIA index declined 0.3% to close at 32,899.37.
  • The NASDAQ index eased 1.4% to end the trading session at 12,144.66.

ASIA MARKET REVIEW

  • Asian markets are trading lower this morning, tracking Friday’s losses on Wall Street.
  • In Japan, retail company, Fast Retailing (TYO:9983) has plummeted 6.5%.
  • Metal manufacturing company, Pacific Metals has plunged 6.0%.
  • On the contrary, steel manufacturing company, Japan Steel Works (TYO:5631) has added 2.8%.
  • Markets in Hong Kong are closed today, on account of a public holiday.
  • In South Korea, electronics company, LG Electronics (KS:066570) has declined 1.7%.
  • On the flipside, Central Insight has soared 18.3%.
  • On Friday, the Hang Seng index declined 3.8% to close at 20,001.96.
  • Today, the Nikkei 225 index is trading 2.1% lower at 26,443.45, while the trading 1.0% lower at 2,618.28. Kospi index is

COMMODITIES

  • At 06:00 SAST today, Brent spot prices marginally fell to trade at $114.14/bl, reversing the previous session’s gains, even as investors look ahead towards more European Union (EU) sanctions on Russia.
  • On Friday, Brent spot prices rose 1.8% to settle at $114.14/bl, as investors shrug off fears about global economic growth as impending EU sanctions on Russian oil raised the prospect of tighter supply. Meanwhile, Baker Hughes reported that the number of US oil and gas rig count rose by 7 to 705 in the week ended 6 May, its highest since March 2020.
  • On Friday, the Illinois North Central No.2 Yellow corn spot prices fell 1.6% to $7.60/bushel.
  • At 06:00 SAST today, gold prices declined 0.4% to trade at $1,876.17/oz. On Friday, gold gained 0.4% to close at $1,883.81/oz, as geopolitical tensions between Russia and Ukraine raised demand for the safe haven yellow metal.
  • On Friday, copper declined 1.1% to close at $9,411.00/mt. Aluminium closed 2.6% lower at $2,809.99/mt.

CURRENCIES

  • On Friday, the South African rand weakened against the US dollar. In the US, non-farm payrolls increased more than expected in April, underscoring the economy's strong fundamentals despite a contraction in gross domestic product in the first quarter.
  • The yield on benchmark government bonds rose on Friday. The yield on 2026 bond rose to 8.48%. Further, the yield for the longer-dated 2030 issue rose to 10.07%.
  • At 06:00 SAST, the US dollar is trading 0.8% higher against the South African rand at R16.1183, while the euro is trading 0.3% higher at R16.9363. At 06:00 SAST, the British pound has gained 0.4% against the South African rand to trade at R19.8087.
  • On Friday, the euro advanced against most of the major currencies. In Germany, industrial production dropped more than expected in March, as supply chains were dampened by geo-political tensions between Russia and Ukraine.
  • At 06:00 SAST, the euro slipped 0.4% against the US dollar to trade at $1.0507, while it has marginally weakened against the British pound to trade at GBP0.855.

ECONOMIC UPDATES

  • In April, the construction PMI in the UK eased to 58.20. The construction PMI had recorded a level of 59.10 in the previous month.
  • In March, on a monthly basis, the seasonally adjusted retail sales in Italy fell 0.5%. In the previous month, retail sales had climbed 0.7%.
  • Industrial production in Germany fell 3.5% in March on an annual basis. In previous month, the non-seasonally & working day adjusted industrial production had climbed by a revised 3.1%.
  • In the US, average hourly earnings of all employees registered a rise of 0.3% in April on a monthly basis, lower than market expectations of an advance of 0.4%. In the previous month, average hourly earnings of all employees had risen by a revised 0.5%.
  • In April, the labour force participation rate recorded a drop to 62.2% in the US. In the prior month, the labour force participation rate had registered a level of 62.4%.
  • Consumer credit in the US climbed $52.45bn in March, compared with an advance of $41.82bn in the prior month. Markets were expecting consumer credit to advance $25.00bn.
  • The seasonally adjusted Ivey PMI eased to 66.30 in April, in Canada, compared to a level of 74.20 in the previous month.
  • In April, the unemployment rate in Canada registered a drop to 5.2%, meeting market expectations of a drop to 5.2%. The unemployment rate had registered a level of 5.3% in the prior month.

CORPORATE UPDATES

SOUTH AFRICA

  • Pan African Resources Plc (JO:PANJ): The mining company successfully explores extensions of its world class ore bodies at Barberton mines with a recently completed underground drilling programme, where a total of 68 underground diamond core boreholes were drilled, with approximately 7,000 metres of drilling. There were high-grade intersections at down-dip extensions to orebodies at Fairview, Sheba and Consort Mines, with reefs remaining open at depth. Grades of up to 184.00g/t over 0.85m were recorded at Sheba Mine intersection, with free gold visible in core samples and development ends. Exploration results will inform and enhance the Group’s Mineral Resource and Reserve estimates – updates to be presented with the company’s annual results on 14 September 2022. Enhanced geological understanding will support additional drilling programmes in future years.
  • Fast food chicken companies mindful of cost-squeeze on consumers amid rising feed prices: South Africans will have to wait to see if the rising cost of poultry due to the war in Ukraine will push up their bill when ordering Nando’s, KFC or Chicken Licken. British media reported that fast-food chains such as Nando’s and KFC in the UK have hiked their prices as the cost to rear poultry shot up with the conflict. KFC SA told TimesLIVE it was “incredibly mindful” of the increasing everyday financial pressure on consumers, compounded by rapidly escalating commodity prices. Chicken Licken declined to comment, while Nando’s plans to launch its winter campaign before the end of the month.

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