Asian Markets Trading Lower This Morning Despite Wall Street Gains

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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the green yesterday, after the South African government decided to stay away from tighter COVID-19 lockdown restrictions until more information is made available on Omicron.
  • Banking companies, Absa (JO: ABGJ ) Group, Capitec Bank (JO: CPIJ ) Holdings and FirstRand (JO: FSRJ ) surged 5.6%, 3.4% and 2.6%, respectively.
  • Retail companies, Cashbuild (JO: CSBJ ), Clicks (JO: CLSJ ) Group and Cie Financiere Richemont SA (JO: CFRJ ) advanced 5.5%, 2.5% and 2.2%, respectively.
  • Mining sector stocks, African Rainbow Minerals (JO: ARIJ ), BHP Group (JO: BHPJ ) and Anglo American (JO: AMSJ ) climbed 5.3%, 2.8% and 1.7%, respectively.
  • Real estate property sector stocks, Attacq (JO: ATTJ ), Emira Property Fund (JO: EMIJ ) and Capital & Counties Properties gained 3.5%, 2.2% and 1.6%, respectively.
  • The JSE All Share index advanced 2.0% to close at 70,008.54.

UK MARKET REVIEW

  • The UK market finished firmer yesterday, reversing Friday’s losses. Telecommunications company, BT Group (LON: BT ) soared 6.1%.
  • Meanwhile, India's Reliance Industries announced that it does not intend to bid for the company.
  • Johnson Matthey (LON: JMAT ) advanced 3.2%, following reports that India's Tata Chemicals (NS: TTCH ) intends to buy the company's batteries business, which is estimated to be worth between $500.00mn and $700.00mn.
  • Oil and energy firms, BP (LON: BP ) and Royal Dutch Shell (LON: RDSa ) added 3.2% and 2.5%, respectively.
  • Mining companies, BHP Group, Anglo American and Antofagasta (LON: ANTO ) gained 2.9%, 1.8% and 1.0%, respectively.
  • On the flipside, retailers, Just Eat Takeaway.com N.V. and J Sainsbury (OTC: JSAIY ) shed 3.1% and 1.3%, respectively.
  • The FTSE 100 index advanced 0.9% to close at 7,109.95.

US MARKET REVIEW

  • US markets ended higher yesterday, after US President, Joe Biden stated that the Omicron variant of coronavirus won’t lead to any domestic lockdowns.
  • Technology companies, salesforce.com (NYSE: CRM ), Intel (NASDAQ: INTC ), Apple (NASDAQ: AAPL ) and Microsoft (NASDAQ: MSFT ) jumped 4.4%, 2.5%, 2.2% and 2.1%, respectively.
  • Insurance companies, UnitedHealth Group (NYSE: UNH ) and American Express (NYSE: AXP ) added 2.8% and 0.7%, respectively.
  • However, peer, Travelers (NYSE: TRV ) eased 0.8%.
  • On the other hand, Walmart (NYSE: WMT ) shed 1.6%, after the company announced that it is looking for a successor for its current Chief Financial Officer, Brett Biggs.
  • The S&P 500 index rose 1.3% to settle at 4,655.27, while the DJIA index advanced 0.7% to close at 35,135.94.
  • The NASDAQ index climbed 1.9% to end the trading session at 15,782.83.

ASIA MARKET REVIEW

  • Asian markets are trading mostly lower this morning, despite overnight gains on Wall Street, amid rising concerns about the Omicron variant of coronavirus among investors.
  • In China, factory activity accelerated more than expected in November.
  • In Japan, optical and digital precision technology company, Olympus Corporation has added 3.4%.
  • On the contrary, automotive companies, Mitsubishi Motors (T: 7211 ) and Nissan Motor (T: 7201 ) have shed 2.4% and 2.2%, respectively.
  • In Hong Kong, Geely Automobile Holdings (HK: 0175 ) has declined 3.1%.
  • However, pharmaceutical company, WuXi Biologics (HK: 2269 ) has added 1.1%.
  • In South Korea, electronics company, LG Electronics (KS: 066570 ) has eased 2.1%.
  • Meanwhile, LG Innotek (KS: 011070 ) has surged 7.2%.
  • The Nikkei 225 index is trading 0.7% higher at 28,474.45.
  • The Hang Seng index has declined 1.1% to trade at 23,581.37, while the Kospi index is trading 1.1% lower at 2,876.18.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices rose 0.8% to trade at $73.49/bl, as investor concerns about surplus crude oil supply eased, amid the seriousness of the Omicron coronavirus variant.
  • Yesterday, Brent spot prices rose 1.9% to settle at $72.88/bl, after Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman al-Saud stated that he was not worried about the Omicron variant of COVID-19. Moreover, the US President, Joe Biden advised not to panic about the new COVID-19 Omicron variant and that they are working with pharmaceutical companies to make contingency plans if new vaccines were needed.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 1.0% to $5.64/bushel.
  • At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,788.90/oz. Yesterday, gold declined 1.0% to close at $1,784.60/oz, as a stronger greenback dampened demand for the safe haven yellow metal.
  • Yesterday, copper rose 0.9% to close at $9,662.50/mt. Aluminium closed 0.5% higher at $2,639.50/mt.

CURRENCIES

  • Yesterday, the South African rand weakened against the US dollar. In the US, contracts to buy existing homes jumped in October, despite an increase in mortgage rates. Meanwhile, the US Federal Reserve (Fed) Chairman, Jerome Powell stated that Innovation Hub will help the central bank improve the current payments system.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 8.11%. Further, the yield on 2023 bond declined to 5.15%, while that for the longer-dated 2030 issue fell to 9.81%.
  • At 06:00 SAST, the US dollar is trading 0.2% lower against the South African rand at R16.1224, while the euro is trading 0.2% lower at R18.2155. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R21.4743.
  • Yesterday, the euro declined against most of the major currencies. In Germany, the preliminary consumer price index (CPI) dropped less than expected in November. Moreover, in the eurozone, consumer confidence dropped in November, in line with market expectations. Further, the industrial confidence in the eurozone eased in November. On the contrary, the business climate accelerated in November in the eurozone.
  • At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1298, while it has marginally gained against the British pound to trade at GBP0.8482.

ECONOMIC UPDATES

  • On a MoM basis, the preliminary CPI in Germany dropped 0.2% in November, compared with an advance of 0.5% in the prior month. Market expectations were for the CPI to fall 0.4%.
  • The final consumer confidence index dropped to -6.80 in the eurozone, in November. The preliminary figures had also recorded a fall to -6.80. Markets were expecting the consumer confidence index to fall to -6.80.
  • The economic sentiment indicator in the eurozone eased to 117.50 in November, in line with market expectations of a drop to a level of 117.50. In the prior month, the economic sentiment indicator had recorded a level of 118.60.
  • The industrial confidence index in the eurozone dropped to 14.10, less than market expectations for a fall to a level of 13.90. In the prior month, the industrial confidence index had recorded a level of 14.20.
  • The services sentiment indicator climbed unexpectedly to a level of 18.40 in November, in the eurozone, compared with a revised level of 18.00 in the prior month.
  • Pending home sales in the US registered a rise of 7.5% in October on a monthly basis, more than market expectations for an advance of 1.0%. In the prior month, pending home sales had fallen by a revised 2.4%.
  • The Dallas Fed manufacturing business index in the US registered a drop to 11.80 in November. The Dallas Fed manufacturing business index had registered a reading of 14.60 in the previous month.
  • Current account surplus in Canada dropped to CAD1.37bn in 3Q21. Canada had registered a current account surplus of CAD3.58bn in the previous quarter.
  • On a YoY basis, the flash industrial production recorded a drop of 4.7% in October, in Japan. In the previous month, industrial production had registered a drop of 2.3%.
  • Unemployment rate fell unexpectedly to 2.7% in Japan, in October. In the previous month, unemployment rate had registered a level of 2.8%.
  • The NBS manufacturing PMI climbed to 50.10 in November, in China, compared with a level of 49.20 in the previous month. Market expectations were for the NBS manufacturing PMI to rise to a level of 49.60.
  • The final business confidence index eased to -16.4% in November, in New Zealand. In the prior month, the business confidence index had registered a level of -13.4%. The preliminary figures had indicated a drop to -18.1%.

CORPORATE UPDATES

SOUTH AFRICA

  • Standard Bank (JO: SBKJ ) Group Limited: The banking and financial services provider, in its voluntary trading update, announced that its revenues continued to recover, supported by higher average balances, a growing client base, improved sales, and higher activity levels in the ten months to 31 October 2021 relative to the comparative period. In South Africa, card spend recovered to 2019 levels, while merchant acquiring turnover was well in excess thereof. In Africa Regions, transaction volumes also reflected good growth. Trading revenue has been better than expected in recent months. Costs remain well managed. Cost growth was driven by higher activity- and performance-related costs, including incentives. While it expects negative jaws for FY21, the company expects jaws to narrow relative to 1H22. The group’s capital and liquidity levels remain well above regulatory minimums and internal risk appetite thresholds. The group’s common equity tier 1 ratio was 13.5% as at 30 September 2021.
  • Invicta Holdings Limited (JO: IVTPp ): The investment holding and management company announced that it had entered into a heads of agreement with Tuludi Capital Proprietary Limited, an investment vehicle managed by New GX Capital Group and Kgalauwane Properties Holdings to purchase a majority shareholding in Dartcom SA Proprietary Limited.
  • Resilient REIT Limited (JO: RESJ ): The real estate investment trust company, in its 1H22 pre-close update, stated that the company’s portfolio achieved strong comparable sales growth of 7.8% for the four months ended October 2021. The company continues to benefit from dominant shopping centres serving markets exposed to export-commodities. The COVID-pandemic continues to impact footfalls however, the trading performance has recovered well. Jabulani Mall and a section of Mams Mall were looted during the social unrest of July 2021. As a result, retail sales in these centres declined by 40.1% and 10.0%, respectively, compared with the same four-month period of 2020 and were excluded from the comparable sales performance. The company’s share of the damage sustained to these properties amounted to R3.60mn and R2.30mn, respectively. The company is insured for damage to the shopping centres as well as the loss of rental during the period of social unrest. Its share of the total insurance claim submitted amounts to R31.00mn.
  • PPC sets 2050 net-zero emissions target: PPC, the biggest SA cement maker, has set a target of attaining net zero emissions by 2050. The company aims to cut emissions 10.0% by 2025 and 27.0% by 2030, it said in its inaugural climate change report.

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