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Market Review: Markets Down, Brent Down, Rand Strengthens

Published 2022/06/02, 08:27
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South Africa Market Review

JSE All Share - Last Month

South African markets closed in the red yesterday, as renewed concerns over global economic growth dampened investors’ morale. Gold miners, Harmony Gold Mining, AngloGold Ashanti (JO:ANGJ) and Gold Fields (JO:GFIJ) shed 4.1%, 2.8% and 2.0%, respectively. Retailers, Lewis Group (JO:LEWJ), Shoprite Holdings and Mr Price Group (JO:MRPJ) declined 3.5%, 1.3% and 1.0%, respectively. Platinum miners, Northam (JO:NHMJ) Platinum, Impala Platinum (JO:IMPJ) Holdings and Anglo American (JO:AMSJ) Platinum declined 3.1%, 2.9% and 2.4%, respectively. Financial firms, Nedbank Group (JO:NEDJ), FirstRand (JO:FSRJ) and Absa (JO:ABGJ) Group fell 2.8%, 2.4% and 2.3%, respectively. Real estate companies, Emira Property Fund (JO:EMIJ), Delta Property Fund (JO:DLTJ) and Capital & Counties Properties (JO:CCOJ) dropped 2.5%, 2.3% and 1.5%, respectively. The JSE All Share index declined 1.7% to close at 70,849.38.

UK Market Review

The UK market finished weaker yesterday, as a slowdown in manufacturing activity weighed on investor sentiment. Travel and leisure companies, Whitbread (LON:WTB), InterContinental Hotels Group (LON:IHG) and International Consolidated Airlines Group (LON:ICAG) S.A., dropped 3.5%, 1.9% and 1.4%, respectively. Royal mail declined 3.3%, as drop in post-pandemic parcel numbers and rising stamp prices weighed on its shares. Consumer goods company Unilever (LON:ULVR) eased 3.1%, peer Reckitt Benckiser Group (LON:PSN) added 0.7%. On the flipside, aerospace companies, BAE Systems (LON:BAES) and Rolls-Royce (LON:RR) Holdings advanced 2.9% and 2.4%, respectively. The FTSE 100 index declined 1.0% to close at 7,532.95.

US Market Review

US markets ended lower yesterday, amid concerns over rising inflation, higher interest rates and global economic outlook. Delta Air Lines (NYSE:DAL) plunged 5.2%, despite raising its 2Q22 revenue forecast. On the contrary, Salesforce (NYSE:CRM) surged 9.9%, after the cloud company upgraded its full year profit forecasts. HP added 1.0%, after the technology company reported robust sales for 2Q22 sales and raised its earnings outlook for fiscal 2022. The S&P 500 index fell 0.8% to settle at 4,101.23, while the DJIA index declined 0.5% to close at 32,813.23. The NASDAQ index eased 0.7% to end the trading session at 11,994.46.

Asia Market Review

Asian markets are trading lower this morning, tracking overnight losses on Wall Street. In Japan, automobile company, Mitsubishi Motors (TYO:7211) Corporation has added 2.6%. On the flipside, electronics company, Sony Group Corp (NYSE:SONY) has shed 2.8%. In Hong Kong, pharmaceutical company, CSPC Pharmaceutical Group (HK:1093) has plunged 7.2%. On the contrary, food company WH Group has advanced 2.5%. In South Korea, electronics company, LG Electronics (KS:066570) and Samsung Electronics (KS:005930) have shed 2.4% and 1.2%, respectively. The Nikkei 225 index is trading 0.1% lower at 27,421.02. The Hang Seng index has declined 1.6% to trade at 20,946.99, while the Kospi index is trading 1.1% lower at 2,656.01.

Commodities

At 06:00 SAST today, Brent spot prices fell 0.7% to trade at $118.75/bl, extending previous sessions losses.

Yesterday, Brent spot prices fell 0.2% to settle at $119.56/bl, after the European Union (EU) leaders agreed for a phased ban on Russian oil and as China ended its lockdown restrictions in Shanghai, which could strengthen demand. Meanwhile, OPEC+ technical committee slashed its forecast for the 2022 oil market surplus by about 0.50mn bpd to 1.40mn bpd. Further, the American Petroleum Institute (API) reported that crude oil inventories declined by about 1.20mnbls for the week ended 27 May.

Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 3.4% to $7.2375/bushel.

At 06:00 SAST today, gold declined 0.1% to trade at $1,845.43/oz. Yesterday, gold gained 0.5% to close at $1,846.60/oz, as a weaker greenback boosted demand for the safe haven yellow metal.

Yesterday, copper rose 0.6% to close at $9,498.50/mt. Aluminium closed 2.2% lower at $2,698.00/mt.

Currencies

Yesterday, the South African rand strengthened against the US dollar. In South Africa, manufacturing activity expanded in at a faster pace in May, as domestic demand normalised and export sales increased. In the US, factory activity slowed for a fourth consecutive month in May, amid supply chain constraints, labour shortages and slowdown in demand growth. Meanwhile, the US ISM manufacturing activity improved in May.

The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 8.28%. Further, the yield on the longer-dated 2030 issue rose to 9.88%.

At 06:00 SAST, the US dollar is trading 0.4% higher against the South African rand at R15.6236, while the euro is trading 0.3% higher at R16.6445. At 06:00 SAST, the British pound has gained 0.2% against the South African rand to trade at R19.4952.

Yesterday, the euro declined against most of the major currencies. In Germany, retail sales fell more than expected in April amid higher prices for food and as retailers face supply problems due to China’s lockdown restrictions. German manufacturing activity improved in May, boosted by order backlogs, increased staffing and improved materials availability. In the eurozone, factory activity dropped to an 18-month low in May, with a fall in orders for the first time in nearly two years.

At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.0652, while it has gained 0.1% against the British pound to trade at GBP0.8539.

Economic Updates

The manufacturing PMI in South Africa advanced to 54.80 in May, compared with a level of 50.70 in the prior month.

The manufacturing PMI in Italy recorded a drop to 51.90 in May, higher than market expectations of a fall to a level of 53.60. The manufacturing PMI had recorded a reading of 54.50 in the previous month.

In France, the final manufacturing PMI recorded a drop to 54.60 in May, compared with a level of 55.70 in the previous month. The preliminary figures had indicated a drop to 54.50. Markets were anticipating manufacturing PMI to fall to 54.50.

The final manufacturing PMI recorded a rise to 54.80 in Germany, in May, more than market expectations for an advance to a level of 54.70. The preliminary figures had indicated a rise to 54.70. In the prior month, manufacturing PMI had registered a level of 54.60.

The final manufacturing PMI in the eurozone registered a drop to 54.60 in May, compared with a level of 55.50 in the previous month. The preliminary figures had indicated a fall to 54.40. Markets were expecting the manufacturing PMI to fall to a level of 54.40.

On a weekly basis, the number of mortgage applications in the US slid 2.3% in the week ended 27 May 2022. The number of mortgage applications had recorded a drop of 1.2% in the prior week.

In May, the final Markit manufacturing PMI in the US recorded a drop to 57.00, more than market expectations for a drop to 57.50. The preliminary figures had indicated a fall to 57.50. In the previous month, the Markit manufacturing PMI had recorded a reading of 59.20.

On a monthly basis, in the US, construction spending advanced 0.2% in April, lower than market expectations of a rise of 0.5%. In the prior month, construction spending had recorded a revised rise of 0.3%.

in May, the ISM manufacturing activity index in the US advanced unexpectedly to 56.10. In the prior month, the ISM manufacturing activity index had recorded a reading of 55.40.

In May, ISM new orders in the US registered a rise to 55.10, higher than market expectations of a rise to a level of 53.60. In the previous month, ISM new orders had recorded a reading of 53.50.

The ISM prices paid index in the US recorded an unexpected drop to a level of 82.20 in May. The ISM prices paid index had recorded a reading of 84.60 in the previous month.

In May, the manufacturing PMI in Canada advanced to 56.80, less than market expectations for an advance to 57.60. In the previous month, the manufacturing PMI had recorded a reading of 56.20.

The final manufacturing PMI fell to a level of 53.30 in May, in Japan, lower than market expectations of a fall to 53.20. The preliminary figures had indicated a fall to 53.20. In the previous month, manufacturing PMI had registered a reading of 53.50.

Corporate Updates

South Africa

Satrix appoints Fikile Mbhokota as new CEO: Satrix, which is credited with pioneering index investing in SA by launching its flagship Satrix 40 exchange traded fund (ETF) more than two decades ago, has appointed Fikile Mbhokota as its new CEO. Mbhokota, whose career in financial services spans more than 18 years, replaces Helena Conradie, who resigned from her position about a year ago after nearly eight years in the role.

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