Market Review: SA Markets Closed in Red, Losses In Travel and Leisure Sector Stock

  • Market Overview

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red on Friday, after the UK placed South Africa on its red list, thus banning all the fights from the region following the discovery of a new COVID-19 variant.
  • Real estate property sector companies, Accelerate Property Fund (JO: APFJ ), Attacq (JO: ATTJ ) and Arrowhead Properties plummeted 10.7%, 7.5% and 5.7%, respectively.
  • Financial sector companies, Absa (JO: ABGJ ) Group Limited, FirstRand (JO: FSRJ ) and Capitec Bank (JO: CPIJ ) Holdings plunged 8.9%, 7.0% and 5.5%, respectively.
  • Mining stocks, Exxaro (JO: EXXJ ) Resources, Anglo American (JO: AMSJ ) and African Rainbow Minerals (JO: ARIJ ) dropped 5.4%, 4.5% and 4.2% respectively.
  • On the contrary, gold miners, Harmony Gold Mining, Gold Fields (JO: GFIJ ) and AngloGold Ashanti (JO: ANGJ ) advanced 6.8%, 3.6% and 2.6%, respectively.
  • The JSE All Share index declined 2.7% to close at 68,614.98.

UK MARKET REVIEW

  • The UK market finished weaker on Friday, following losses in travel and leisure sector stocks as the new variant of COVID-19 dampened investor sentiment.
  • International Consolidated Airlines Group (LON: ICAG ) SA, InterContinental Hotels Group (LON: IHG ) and Whitbread (LON: WTB ) plunged 14.9%, 9.2% and 8.7%, respectively.
  • Insurance companies, Prudential (LON: PRU ), Aviva (LON: AV ) and Legal & General Group plummeted 8.2%, 5.9% and 5.1%, respectively.
  • Banking firms, Lloyds Banking Group (LON: LLOY ), Barclays (LON: BARC ) and HSBC dropped 7.4%, 7.1% and 6.7%, respectively.
  • Mining companies, Anglo American, Antofagasta (LON: ANTO ) and BHP Group (JO: BHPJ ) shed 7.4%, 6.0% and 2.4%, respectively.
  • On the flipside, online grocery company, Ocado (LON: OCDO ) Group gained 4.6%.
  • The FTSE 100 index declined 3.6% to close at 7,044.03.

US MARKET REVIEW

  • US markets ended lower on Friday, as a surge in coronavirus cases due to the new COVID-19 variant raised concerns among investors.
  • Travel companies, Norwegian Cruise Line Holdings (NYSE: NCLH ), Delta Air Lines (NYSE: DAL ) and Southwest Airlines (NYSE: LUV ) shed 11.4%, 8.3% and 4.3%, respectively.
  • Insurance companies, American Express (NYSE: AXP ), Travelers (NYSE: TRV ) and UnitedHealth Group (NYSE: UNH ) plummeted 8.6%, 3.3% and 2.3%, respectively.
  • Technology companies, Apple (NASDAQ: AAPL ), Microsoft (NASDAQ: MSFT ) and salesforce.com (NYSE: CRM ) dropped 3.2%, 2.4% and 1.7%, respectively.
  • Financial services companies, JPMorgan Chase (NYSE: JPM ) and Goldman Sachs Group (NYSE: GS ) shed 3.0% and 2.5%, respectively.
  • The S&P 500 index fell 2.3% to settle at 4,594.62, while the DJIA index declined 2.5% to close at 34,899.34.
  • The NASDAQ index eased 2.2% to end the trading session at 15,491.66.

ASIA MARKET REVIEW

  • Asian markets are trading lower this morning, as the discovery of the Omicron Covid variant dampened investor morale.
  • In Japan, automobile companies, Mazda Motor (T: 7261 ) Corporation and Toyota Motor (T: 7203 ) have dropped 4.4% and 1.9%, respectively.
  • In Hong Kong, e-commerce company, Meituan (HK: 3690 ) has plunged 7.6%, after the company reported a $1.56bn loss in its 3M22 period ended 30 September 2021.
  • On the flipside, optical products company, Sunny Optical Technology Group (HK: 2382 ) has added 3.7%.
  • In South Korea, electronics company, LG Electronics (KS: 066570 ) has eased 0.8%.
  • On the other hand, peer, Samsung Electronics (KS: 005930 ) has added 0.8%. The Nikkei 225 index is trading 0.5% lower at 28,619.85.
  • The Hang Seng index has declined 0.6% to trade at 23,924.94, while the Kospi index is trading 0.5% lower at 2,919.78.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices rose 4.2% to trade at $74.52/bl, reversing the previous session’s losses.
  • On Friday, Brent spot prices fell 11.8% to settle at $71.55/bl, as the new variant of COVID-19 added to concerns about a crude oil supply surplus in 1Q22. Moreover, the Baker Hughes reported that the number of active US oil rigs rose by 6 to 467 for the week.
  • On Friday, the Illinois North Central No.2 Yellow corn spot prices rose 1.2% to $5.69/bushel.
  • At 06:00 SAST today, gold prices declined 0.5% to trade at $1,794.19/oz. On Friday, gold gained 0.8% to close at $1,802.59/oz, as a weaker greenback and worries about the Omicron variant of COVID-19 gave a boost to the safe haven yellow metal.
  • On Friday, copper declined 3.2% to close at $9,572.00/mt. Aluminium closed 3.7% lower at $2,626.50/mt.

CURRENCIES

  • On Friday, the South African rand weakened against the US dollar. In South Africa, President, Cyril Ramaphosa has called on countries to “urgently” reverse “scientifically unjustified” travel restrictions linked to the discovery of a new variant of the coronavirus.
  • The yield on benchmark government bonds mostly rose on Friday. The yield on 2026 bond rose to 8.18%. Further, the yield on 2023 bond declined to 5.24%, while that for the longer-dated 2030 issue rose to 9.90%.
  • At 06:00 SAST, the US dollar is trading 0.9% lower against the South African rand at R16.1470, while the euro is trading 1.2% lower at R18.2141. At 06:00 SAST, the British pound has declined 0.8% against the South African rand to trade at R21.5275.
  • On Friday, the euro advanced against most of the major currencies. In the eurozone, the European Central Bank President, Christine Lagarde stated that the eurozone is prepared to face the economic impact of a new wave of the Omicron COVID-19 variant. Meanwhile, on a monthly basis, eurozone’s M3 money supply advanced in October.
  • At 06:00 SAST, the euro slipped 0.3% against the US dollar to trade at $1.1279, while it has weakened 0.3% against the British pound to trade at GBP0.8460.

ECONOMIC UPDATES

  • In 3Q21, the seasonally adjusted gross domestic product (GDP) recorded a rise of 1.7% on a quarterly basis in Switzerland, lower than market expectations of a rise of 2.0%. In the prior quarter, the GDP had risen 1.8%.
  • In November, the consumer confidence index in Italy eased to 117.50, lower than market expectations of a fall to a level of 117.00. In the previous month, the consumer confidence index had recorded a level of 118.40.
  • In Italy, the economic sentiment index climbed to 115.10 in November. The economic sentiment index had recorded a reading of 115.00 in the previous month.
  • The business confidence index recorded an unexpected rise to a level of 116.00 in Italy, in November, compared with a reading of 114.90 in the previous month.
  • The import price index in Germany rose 3.8% in October on a monthly basis, higher than market expectations of an advance of 2.1%. The import price index had registered a rise of 1.3% in the prior month.
  • On a YoY basis, in the eurozone, M3 money supply registered a rise of 7.7% in October, compared with an advance of 7.4% in the prior month. Market anticipations were for M3 money supply to rise 7.4%.
  • In Japan, retail trade rose 1.1% on a monthly basis, in October. Retail trade had registered a rise of 2.7% in the previous month.
  • Industrial profits (YoY) climbed 24.6% in China on a YoY basis, in October. Industrial profits (YoY) had registered a rise of 16.3% in the previous month.

CORPORATE UPDATES

SOUTH AFRICA

  • Vukile Property Fund Limited (JO: VKEJ ): The real estate investment trust company, in its 1H22 trading statement, indicated that it expects its distributable earnings per share to be between 75.00c per shares and 80.00c per share, higher than the distributable earnings per share of 46.63c recorded in the previous corresponding period. Vukile further expects the dividend per share for 1H22 to be at least 40.00c per share, whilst no dividend was declared for the previous corresponding period.
  • The Bidvest (JO: BVTJ ) Group Limited: The trading and distribution company, in its 4M22 trading update for the period ended 31 October 2021, revealed that revenue and profit growth continue to build momentum across the Group, despite the unfortunate disruptions caused by the unrest in July 2021 as well as the third wave of COVID-19 infections experienced in South Africa. The bolt-on acquisitions made in Noonan in the second half of FY21 contributed notably, particularly to revenue. During the four months to October 2021, the combination of pleasing revenue growth, gross margin focus and cost management leveraged into strong trading profit growth. Encouragingly, demand is slowly returning in the travel and tourism related industries as well as corporate office consumables. Discretionary spend is under some pressure and its manufacturing facilities are being impacted by electricity supply interruptions.
  • Oceana Group Limited (JO: OCEJ ): The investment holding company with interests in fishing, cold storage and shipping, in its FY22 trading statement, revealed that its revenue was down by 2.0%, driven by a 6.0% overall decline in sales volumes, particularly due to tough trading conditions in 1H22. This was mitigated by a recovery in volumes in the 2H22 period, notwithstanding the reduced inventory levels resulting from the KZN riots and further bolstered by a 5.0% price increase. Procurement of frozen fish decreased by 32.0% due to global supply chain impediments and Covid-19 impact on fishing in West Africa early in the calendar year. This impacted factory throughput and fixed cost absorptions. Positively this was partly offset by fresh pilchard catches being 93.0% up on the prior year. Continued focus on production efficiencies and cost savings in selling & distribution costs combined with a favourable exchange rate have contributed to margin improvement of 20.0 %. Overall performance in the segment is strong.
  • Oil prices slide as new Covid-19 variant scares investors: Oil prices recorded their steepest daily fall since July as a new Covid-19 variant spooked investors and added to concerns that a supply surplus could swell in the first quarter.

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