SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red on Friday, as comments from the US Federal Reserve (Fed) regarding an interest rate hike in March 2022, amid soaring domestic energy costs and supply-chain disruptions weighed on investor sentiment.
- Miners, Kumba Iron Ore (JO:KIOJ), African Rainbow Minerals (JO:ARIJ) and Anglo American (JO:AMSJ) shed 4.6%, 3.4% and 1.1%, respectively.
- Platinum mining companies, Anglo American Platinum (JO:AGLJ), Northam Platinum Holdings (JO:NHMJ) and Royal Bafokeng Platinum (JO:RBPCBe) declined 3.8%, 3.3% and 2.4%, respectively.
- Market heavyweight, Naspers (JO:NPNJn) dropped 1.4%.
- On the flipside, real estate property stocks, Delta Property Fund (JO:DLTJ), Capital & Counties Properties (JO:CCOJ) and Arrowhead Properties (JO:AHAJ) advanced 1.7%, 1.6% and 1.0%, respectively.
- The JSE All Share index declined 1.0% to close at 75,160.21.
- The UK market finished weaker on Friday, despite the release of stronger than expected domestic economic data.
- Discount retailer, B&M European Value Retail SA (LON:BMEB) plunged 5.3%, after SSA Investments sold 4.0% of its stake worth 40.00mn shares in the company.
- Miners, Antofagasta (LON:ANTO) and Fresnillo (LON:FRES) dropped 3.9% and 3.6%, respectively.
- Experian (LON:EXPN) shed 2.4%, despite reporting a significant increase in its 3Q22 revenues, driven mainly by business growth in all its units.
- On the contrary, banking companies, Standard Chartered (LON:STAN), Lloyds Banking Group (LON:LLOY) and HSBC Holdings (LON:HSBA) advanced 2.3%, 1.9% and 0.7%, respectively.
- Pharmaceutical companies, AstraZeneca (LON:AZN) and GlaxoSmithKline (LON:GSK) added 1.1% and 0.6%, respectively.
- The FTSE 100 index declined 0.3% to close at 7,542.95.
US MARKET REVIEW
- US markets ended mostly higher on Friday.
- However, gains were capped after the New York Fed President, John Williams stated that he expects economic growth to slow down in 2022 due to the spread of the Omicron variant of Covid-19.
- Wells Fargo (NYSE:WFC) advanced 3.7%, after reporting better than expected 4Q21 revenues.
- Technology companies, Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC) and salesforce.com (NYSE:CRM) advanced 1.8%, 1.4% and 1.1%, respectively.
- On the other hand, JPMorgan Chase (NYSE:JPM) & Company plunged 6.2%, despite reporting robust earnings in its 4Q21 results. Citigroup (NYSE:C) dropped 1.3%, after the bank posted a decrease in its 4Q21 profits.
- The S&P 500 index rose 0.1% to settle at 4,662.85, while the DJIA index declined 0.6% to close at 35,911.81.
- The NASDAQ index climbed 0.6% to end the trading session at 14,893.75.
ASIA MARKET REVIEW
- Asian markets are trading mostly lower this morning.
- On the economic data front, the Chinese economy grew more than expected in 4Q21, following an increase in the country’s factory output and retail sales.
- In Japan, financial services company, Shinsei Bank, Ltd. (T:8303) has added 3.2%.
- On the contrary, Hitachi has shed 2.8%. In Hong Kong, Geely Automobile Holdings (HK:0175) has declined 3.6%.
- Meanwhile, pharmaceutical company, CSPC Pharmaceutical Group (HK:1093) has advanced 4.1%.
- In South Korea, electronics company, LG Electronics (KS:066570) has shed 3.8%.
- On the flipside, Central Insight has soared 18.3%.
- The Nikkei 225 index is trading 0.9% higher at 28,364.29.
- The Hang Seng index has lower at 0.6% to trade at 24,245.81, while the Kospi index is trading 1.3% lower at 2,883.86.
COMMODITIES
- At 06:00 SAST today, Brent spot prices fell 0.2% to trade at $86.19/bl, reversing the previous session’s gains.
- On Friday, Brent spot prices rose 2.3% to settle at $86.34/bl, buoyed by supply restrictions and concerns regarding a Russian attack on neighbouring Ukraine. Meanwhile, China agreed to release crude oil from its national strategic stockpiles around the Lunar New Year holidays that start on 1 February as part of a plan to reduce global crude prices. Baker Hughes reported that the number of active US oil drilling rigs increased by 11 to 492 for the week ended 14 January. This followed a rise of just one oil rig the week before, and marked the biggest weekly climb since October.
- On Friday, the Illinois North Central No.2 Yellow corn spot prices marginally fell to $5.73/bushel.
- At 06:00 SAST today, gold prices advanced 0.1% to trade at $1,819.09/oz. On Friday, gold declined 0.3% to close at $1,817.94/oz, as a stronger greenback dragged down demand for the safe haven yellow metal,
- On Friday, copper declined 2.4% to close at $9,730.25/mt. Aluminium closed 1.2% higher at $2,976.20/mt.
CURRENCIES
- On Friday, the South African rand strengthened against the US dollar. In the US, retail sales dropped to its lowest level in 10 months in December, as consumers likely started holiday shopping early in October to avoid shortages at stores. Factory output dropped in the US in December, as automobile production dropped and as manufacturing activity was dragged down by the spread of the Omicron variant of Covid-19 along with existing labour and supply chain constraints. Consumer sentiment in the US dropped in early January to the second lowest level in a decade, as consumers worried about soaring inflation and casted doubts on the ability of the US government’s economic policies to fix it.
- The yield on benchmark government bonds mostly fell on Friday. The yield on 2026 bond fell to 7.75%. Further, the yield on 2023 bond advanced to 5.13%, while that for the longer-dated 2030 issue fell to 9.35%.
- At 06:00 SAST, the US dollar is trading 0.1% higher against the South African rand at R15.4053, while the euro is trading 0.2% higher at R17.5899. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R21.072.
- On Friday, the euro declined against most of the major currencies. In the eurozone, trade balance swung to a deficit in November. The European Central Bank (ECB) President, Christine Lagarde stated that inflation in the eurozone will drop this year from a record high, adding that the ECB is set to take necessary measures to get it down to its 2.0% target. In the UK, the economy grew strongly in November to reach its pre-pandemic levels.
- At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.1418, while it has marginally gained against the British pound to trade at GBP0.8348.
ECONOMIC UPDATES
- Visible trade deficit in the UK narrowed to GBP11.34bn in November, compared with a visible trade deficit of GBP11.81bn in the previous month.
- On a MoM basis, industrial production climbed 1.0% in the UK, in November. In the prior month, industrial production had fallen by a revised 0.5%.
- In November, manufacturing production in the UK rose 1.1% on a monthly basis, more than market expectations for an advance of 0.2%. In the prior month, manufacturing production had climbed by a revised 0.1%.
- In November, total trade surplus in the UK rose to GBP0.63bn. UK had registered a total trade surplus of GBP0.15bn in the previous month.
- Construction output recorded a rise of 3.5% in the UK on a monthly basis, in November. In the prior month, construction output had registered a revised drop of 1.7%.
- On a MoM basis, gross domestic product (GDP) in the UK advanced 0.9% in November, more than market expectations for an advance of 0.4%. GDP had climbed by a revised 0.2% in the prior month.
- In the UK, the Rightmove house price index registered a rise of 0.3% in January on a MoM basis. In the prior month, the Rightmove house price index had registered a drop of 0.7%.
- In December, the final consumer price index (CPI) (ex-tobacco) rose 0.2% in France on a monthly basis, at par with market expectations of an advance of 0.2%. In the prior month, the CPI (ex-tobacco) had advanced 0.4%. The preliminary figures had also recorded a rise of 0.2%.
- The final CPI in Spain advanced 1.2% in December on a monthly basis, compared with an advance of 0.3% in the prior month. The preliminary figures had recorded an advance of 1.3%. Market expectations were for the CPI to rise 1.3%.
- In December, on an annual basis, the non-seasonally adjusted GDP registered a rise of 2.7% in Germany. In the previous year, GDP had dropped 5.0%.
- The trade deficit in the eurozone recorded a reading of EUR1.50bn in November. Eurozone had reported the non-seasonally adjusted trade surplus of EUR3.60bn in the prior month.
- In December, on a monthly basis, retail sales (ex-auto & gas) in the US recorded a drop of 2.5%. In the prior month, retail sales (ex-auto & gas) had fallen by a revised 0.1%.
- In December, industrial production recorded a drop of 0.1% in the US on a monthly basis, compared with market expectations of a rise of 0.4%. In the previous month, industrial production had climbed by a revised 0.7%.
- On a monthly basis, in the US, manufacturing production dropped 0.3% in December, compared with market expectations of an advance of 0.5%. In the previous month, manufacturing production had climbed by a revised 0.6%.
- The flash Reuters/Michigan consumer sentiment index in the US registered a drop to 68.80 in January, more than market expectations for a fall to 70.00. The Reuters/Michigan consumer sentiment index had registered a reading of 70.60 in the previous month.
- On a MoM basis, machinery orders rose 3.4% in November, in Japan. In the prior month, machinery orders had risen 3.8%.
- In 4Q21, GDP in China rose 1.6% on a quarterly basis, more than market expectations for an advance of 1.1%. In the prior quarter, GDP had recorded a rise of 0.2%.
- Retail sales recorded a rise of 1.7% in China on a YoY basis in December, compared with an advance of 3.9% in the prior month. Markets were expecting retail sales to rise 3.7%.
- In China, industrial production rose 4.3% in December on a YoY basis, compared with an advance of 3.8% in the prior month. Markets were expecting industrial production to climb 3.6%.
CORPORATE UPDATES
SOUTH AFRICA
- Merafe Resources Limited: The mining company, in its production report, stated that production from the Glencore (LON:GLEN) Merafe Chrome Venture increased by approximately 5.1% and 42.7% in 4Q21 and FY21, respectively, compared with that recorded in the quarter and year ended 31 December 2020. The increase was mainly due to current production being less affected by the COVID-19 restrictions coupled with improved plant efficiencies achieved at its smelters.
- Oil prices set for fourth week of gains: Oil futures rose and were set for a fourth week of gains, boosted by supply constraints and a weaker dollar, though an imminent release of crude reserves from China looms.