SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red yesterday, following concerns about a hike in the key interest rate by the US Federal Reserve (Fed) and Russia-Ukraine tensions.
- Pharmaceutical companies, Aspen (JO:APNJ) Pharmacare Holdings, Netcare (JO:NTCJ) and Life Healthcare Group Holdings (JO:LHCJ) plunged 6.1%, 2.6% and 1.8%, respectively.
- Miners, African Rainbow Minerals (JO:ARIJ), Anglo American (JO:AMSJ) and BHP Group (JO:BHPJ) declined 6.0%, 5.6% and 2.9%, respectively.
- Retail companies, Cie Financiere Richemont SA (JO:CFRJ), Mr Price Group (JO:MRPJ) and Cashbuild (JO:CSBJ) plummeted 5.4%, 4.5% and 3.5%, respectively.
- Real estate property stocks, Arrowhead Properties (JO:AHAJ), Capital & Counties Properties (JO:CCOJ) and Attacq (JO:ATTJ) dropped 5.2%, 2.6% and 2.4%, respectively.
- Banking firms, Absa (JO:ABGJ) Group, FirstRand (JO:FSRJ) and Capitec Bank (JO:CPIJ) Holdings shed 2.8%, 2.7% and 1.6%, respectively.
- The JSE All Share index declined 3.6% to close at 72,164.02.
- The UK market finished weaker yesterday, dragged down by broad based losses in real estate property sector stocks.
- Barratt Developments (LON:BDEV) and Berkeley Group (LON:BKGH) plunged 8.9% and 6.4%, respectively.
- Travel and leisure sector stocks, International Consolidated Airlines Group (LON:ICAG) and InterContinental Hotels Group (LON:IHG) plummeted 6.5% and 4.6%, respectively.
- On the flipside, consumer goods company, Unilever (LON:ULVR) soared 7.3%, following reports that Nelson Peltz's activist hedge fund, Trian had built an investment in the company.
- Vodafone Group (LON:VOD) jumped 4.5%, following reports that it plans to buy Three UK, and is in talks to strike a deal with competitor, Iliad to merge their businesses in Italy.
- The FTSE 100 index declined 2.6% to close at 7,297.15.
US MARKET REVIEW
- US markets ended higher yesterday, as better than expected corporate earnings boosted investor morale.
- Halliburton (NYSE:HAL) rose 3.8%, after the company reported more than expected FY21 net profit and revenues.
- On the contrary, AstraZeneca (LON:AZN) shed 3.6%, even after the company received an orphan-drug designation for its experimental treatment for transthyretin-mediated amyloidosis, a rare condition that causes heart failure and death within years of diagnosis.
- Peer, Merck & Company dropped 1.4%, after the company stated that the US Food and Drug Administration (FDA) requested additional information about its experimental cough treatment.
- The S&P 500 index rose 0.3% to settle at 4,410.13, while the DJIA index advanced 0.3% to close at 34,364.50.
- The NASDAQ index climbed 0.6% to end the trading session at 13,855.13.
ASIA MARKET REVIEW
- Asian markets are trading lower this morning, despite overnight gains on Wall Street, as investors focus on geopolitical tensions with fears of a Russian invasion of Ukraine growing.
- In Japan, steel company, Japan Steel Works (T:5631) has plunged 6.1%.
- On the other hand, Canon (T:7751) has advanced 1.3%.
- In Hong Kong, pharmaceutical company, Sino Biopharmaceutical (HK:1177) has shed 4.2%. On the contrary, Netease has added 0.6%.
- In South Korea, technology company, Samsung Electronics (KS:005930) has shed 1.7%. Electronics company, LG Electronics (KS:066570) has eased 1.5%.
- The Nikkei 225 index is trading 1.5% lower at 27,167.80.
- The Hang Seng index has declined 1.3% to trade at 24,338.58, while the Kospi index is trading 2.9% lower at 2,710.10.
COMMODITIES
- At 06:00 SAST today, Brent spot prices fell 0.3% to trade at $86.39/bl, extending the previous session’s losses.
- Yesterday, Brent spot prices fell 1.8% to settle at $86.63/bl, as investor concerns regarding an increase in key interest rates by the US Fed and as increasing tensions in Ukraine after Russia massed troops near its borders, fuelled fears of supply disruption in Eastern Europe. Moreover, in the Middle East, the United Arab Emirates (UAE) seized and destroyed two Houthi ballistic missiles targeting the Gulf country after a deadly attack a week earlier.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.7% to $6.04/bushel.
- At 06:00 SAST today, gold prices marginally declined to trade at $1,842.71/oz. Yesterday, gold gained 0.4% to close at $1,843.06/oz, as a weaker greenback gave a boost to demand for the safe haven yellow metal.
- Yesterday, copper declined 2.2% to close at $9,763.00/mt. Aluminium closed 0.3% lower at $3,042.00/mt.
CURRENCIES
- Yesterday, the South African rand weakened against the US dollar. In the US, business activity grew at its slowest pace in 18 months in January as a winter surge in COVID-19 infections caused labour shortages at factories, even though demand remained strong. Service activity dropped in December, dampened by labour shortages, employee absences and Omicron. However, the drop was capped by demand for services remaining strong and companies hiring more workers and reducing the backlog of unfinished work.
- The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.66%. Further, the yield on 2023 bond advanced to 5.23%, while that for the longer-dated 2030 issue rose to 9.28%.
- At 06:00 SAST, the US dollar is trading 0.2% higher against the South African rand at R15.298, while the euro is trading 0.1% higher at R17.3079. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R20.6147.
- Yesterday, the euro advanced against most of the major currencies. In Germany, manufacturing activity climbed to a five-month high in January, buoyed by an ease in supply chain bottlenecks. Service output boosted in December, indicating towards a positive attitude among consumers and businesses, despite the impact of the Omicron variant of Covid-19. In the eurozone, factory output declined in January, dampened by Omicron cases in the region.
- At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1314, while it has marginally weakened against the British pound to trade at GBP0.8395.
ECONOMIC UPDATES
- The flash services PMI registered an unexpected drop to 53.30 in the UK, in January. The services PMI had recorded a level of 53.60 in the previous month.
- The preliminary manufacturing PMI eased unexpectedly to a level of 56.90 in January, in the UK, compared to a reading of 57.90 in the prior month.
- The flash services PMI recorded a drop to 53.10 in France, in January, compared to a reading of 57.00 in the prior month. Market anticipations were for services PMI to drop to 55.30.
- In January, the flash manufacturing PMI dropped to 55.50 in France, in line with market expectations of a fall to a level of 55.50. In the prior month, manufacturing PMI had registered a reading of 55.60.
- The flash services PMI in Germany registered an unexpected rise to 52.20 in January. Services PMI had recorded a reading of 48.70 in the previous month.
- In January, the preliminary manufacturing PMI in Germany registered an unexpected rise to a level of 60.50, compared to a reading of 57.40 in the previous month.
- The flash services PMI eased to 51.20 in January, in the eurozone, compared to a reading of 53.10 in the prior month. Markets were expecting services PMI to fall to a level of 52.20.
- The preliminary manufacturing PMI recorded an unexpected rise to 59.00 in the eurozone, in January, compared to a reading of 58.00 in the prior month.
- The flash Markit services PMI recorded a drop to 50.90 in the US, in January, more than market expectations for a fall to a level of 55.00. Markit services PMI had recorded a level of 57.60 in the prior month.
- The preliminary Markit manufacturing PMI eased to 55.00 in January, in the US, compared to a level of 57.70 in the prior month. Market anticipations were for the Markit manufacturing PMI to ease to a level of 56.70.
- In December, the Chicago Fed national activity index in the US registered a drop to -0.15. The Chicago Fed national activity index had registered a revised level of 0.44 in the previous month.
- The business confidence index in Australia eased to -12.00 in December. In the prior month, the business confidence index had registered a reading of 12.00.
- In 4Q21, on a QoQ basis, the consumer price index (CPI) climbed 1.3% in Australia, more than market expectations for an advance of 1.0%. In the previous quarter, the CPI had risen 0.8%.
CORPORATE UPDATES
SOUTH AFRICA
- Sibanye Stillwater (JO:SSWJ) Limited: The mining company announced that it had entered into purchase and sale agreements with affiliates of funds advised by Appian Capital Advisory LLP (‘Appian’) to purchase 100.0% of the Santa Rita nickel mine and the Serrote copper mine, both located in Brazil, for a cash consideration of $1.00bn and a 5.0% net smelter royalty over potential future underground production at Santa Rita. The company has been advised by Appian that subsequent to the signing of the Atlantic Nickel SPA and the MVV SPA a geotechnical event occurred at Santa Rita. The company has assessed the event and its effect and has concluded that it is and is reasonably expected to be material and adverse to the business, financial condition, results of operations, the properties, assets, liabilities or operations of Santa Rita. Accordingly, pursuant to the terms of the Atlantic Nickel SPA, Sibanye BM Brazil (Proprietary) Limited, a wholly owned subsidiary of Sibanye-Stillwater, has given notice of termination of the Atlantic Nickel SPA. As the MVV SPA is conditional on the contemporaneous closing of the Atlantic Nickel SPA, and that condition has become impossible to satisfy, the Purchaser has also given notice of termination of the MVV SPA.
- Clicks (JO:CLSJ) Group Limited: The retail company, in its trading update for the 20 weeks to 16 January 2022, indicated that its retail revenue rose 14.4%, as compared with that posted in the corresponding period of the previous year. Group turnover increased by 10.4% to R15.10bn.
- MTN (JO:MTNJ) added to top sustainability index: MTN, whose share price has more than doubled in the past 12 months, has been added to a top sustainable investment index as its ratings on environmental, social and governance (ESG) performance have gone up recently.