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Markets Opened Green, Brent Price Goes Up, SA Rand Decreased

Published 2022/05/03, 11:14
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South Africa Market Review

South African markets closed in the green on Friday, buoyed by broad-based gains in mining sector stocks. Diversified miners, African Rainbow Minerals (JO:ARIJ), Anglo American (JO:AMSJ) and Exxaro (JO:EXXJ) Resources advanced 4.3%, 3.8% and 3.4%, respectively. Platinum miners, Anglo American Platinum, Impala Platinum Holdings and Royal Bafokeng Platinum (JO:RBPCBe) gained 4.0%, 2.7% and 1.9%, respectively. Market heavyweight, Naspers (JO:NPNJn) soared 7.9%. Real estate companies, Emira Property Fund (JO:EMIJ), Growthpoint Properties (JO:GRTJ) and Capital & Counties Properties (JO:CCOJ) added 3.1%, 1.6% and 1.2%, respectively. On the flipside, financial firms, Capitec Bank (JO:CPIJ) Holdings, FirstRand (JO:FSRJ) and Standard Bank (JO:SBKJ) Group shed 2.3%, 1.1% and 1.0%, respectively. The JSE All Share index advanced 1.3% to close at 72,438.25.

UK Market Review

The UK market finished firmer on Friday, buoyed by robust corporate earnings. Smurfit Kappa Group (LON:SKG) gained 4.3%, after the packaging company reported an increase in both revenue and underlying earnings in its 1Q22 due to significant and ongoing capital investment that the company made. Pearson advanced 1.9%, after the publishing company stated that it would receive a one-off tax boost this fiscal year as it maintained its annual guidance. On the contrary, Hikma Pharmaceuticals (LON:HIK) plummeted 7.2%, after the company reported a slow start to the year dampened by headwinds at its generics business, which had been hit "by increased competition and a challenging pricing environment”. The FTSE 100 index advanced 0.5% to close at 7,544.55.

US Market Review

US markets ended higher yesterday, following a surge in US Treasury yields. Technology companies, Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT) and salesforce.com (NYSE:CRM) gained 3.1%, 2.5% and 0.9%, respectively. Bankers, Goldman Sachs Group (NYSE:GS) and JPMorgan Chase (NYSE:JPM) & Company advanced 1.6% and 0.9%, respectively. On the other hand, insurance companies, American Express (NYSE:AXP), UnitedHealth Group (NYSE:UNH) and Travelers (NYSE:TRV) declined 1.8%, 1.5% and 0.6%, respectively. Pharmaceutical companies, Johnson & Johnson (NYSE:JNJ) and Amgen (NASDAQ:AMGN) dropped 1.0%, each. The S&P 500 index rose 0.6% to settle at 4,155.38, while the DJIA index advanced 0.3% to close at 33,061.50. The NASDAQ index climbed 1.6% to end the trading session at 12,536.02.

Asia Market Review

Asian markets are trading higher this morning, tracking overnight gains on Wall Street. In Japan, markets are closed today on account of a public holiday. In Hong Kong, e-commerce company, JD.com has plunged 5.3%. Electronics company, Xiaomi Corporation has declined 3.9%. On the flipside, glass manufacturing company, Xinyi Glass Holdings (HK:0868) has advanced 3.7%. Residential property company, China Resources Land has added 3.0%. In South Korea, electronics components company, SoluM Company has soared 6.2%. Technology company, Samsung Electronics (KS:005930) has advanced 1.6%. On the contrary, automobile company, SsangYong Motor (KS:003620) Company has plunged 19.2%. Yesterday, the Nikkei 225 index eased 1.8% to close at 26,818.53. Today, the Hang Seng index has advanced 0.2% to trade at 21,137.93, while the Kospi index is trading 0.2% higher at 2,692.43.

Commodities

At 06:00 SAST today, Brent spot prices rose 0.7% to trade at $107.33/bl, extending previous session’s gains.

Yesterday, Brent spot prices rose 0.5% to settle at $107.13/bl, amid consistent fears that a ban on Russian crude oil by the European Union would dampen oil supplies. Meanwhile, a top US oil and natural gas trade group has emerged against the passage of a bill that would open the OPEC+ oil production group and countries working with it to lawsuits for collusion on boosting petroleum prices. The NOPEC bill gives the US Attorney General the option to sue oil-producing countries, such as those in OPEC, under anti-trust laws. Further, an increase in OPEC+ oil output in April undershot the rise planned under a deal with allies, as declines in Libya and Nigeria offset supply increases by Saudi Arabia and other top producers.

Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.6% to $7.84/bushel.

At 06:00 SAST today, gold prices declined 1.7% to trade at $1,863.82/oz. Yesterday, gold declined 1.8% to close at $1,863.02/oz, as an increase in US Treasury Yields and a stronger dollar dampened demand for the safe haven yellow metal.

Yesterday, copper marginally declined to close at $9,770.50/mt. Aluminium closed marginally lower at $3,032.50/mt.

Currencies

Yesterday, the South African rand weakened against the US dollar. In the US, manufacturing activity accelerated in April at its fastest pace in seven months even as inflationary pressures intensified.

The yield on benchmark government bonds fell on Friday. The yield on 2026 bond fell to 8.32%. Further, the yield for the longer-dated 2030 issue fell to 9.95%.

At 06:00 SAST, the US dollar is trading 1.8% higher against the South African rand at R16.0764, while the euro is trading 1.3% higher at R16.8953. At 06:00 SAST, the British pound has gained 1.3% against the South African rand to trade at R20.1292.

Yesterday, the euro advanced against most of the major currencies. In Germany, the economy grew slightly in 1Q22, buoyed by stronger domestic investment. However, the war in Ukraine began having an increasing impact from the end of February 2022. In the eurozone, inflation hit a record high for the sixth consecutive month in April, buoyed by rising energy prices. Meanwhile, manufacturers in the eurozone lost further growth momentum in April as output increased only marginally and at the weakest rate since June 2020, amid supply chain bottlenecks and a hike in energy prices. Also, consumer confidence in the eurozone dropped in April due to rising inflation and Russia's invasion of Ukraine.

At 06:00 SAST, the euro slipped 0.3% against the US dollar to trade at $1.0509, while it has gained 0.1% against the US dollar to trade at GBP0.8394.

Economic Updates

The flash gross domestic product (GDP) recorded a rise of 6.4% on an annual basis in Spain, in 1Q22, compared with a rise of 5.5% in the prior quarter. Market anticipations were for GDP to climb 6.5%.

In Italy, the preliminary GDP eased 0.2% on a QoQ basis in 1Q22, compared with a rise of 0.7% in the prior quarter. Market anticipations were for the GDP to ease 0.2%.

The manufacturing PMI registered a drop to 54.50 in Italy, in April, compared with a reading of 55.80 in the prior month. Markets were expecting the manufacturing PMI to fall to a level of 55.00.

On a MoM basis, in France, the flash consumer price index (CPI) (ex-tobacco) rose 0.4% in April, compared with an advance of 1.4% in the prior month. Markets were expecting the CPI (ex-tobacco) to advance 0.2%.

On a monthly basis in March, the producer price index (PPI) rose 4.3% in France, more than market expectations for an advance of 2.4%. The PPI had risen by a revised 0.9% in the prior month.

On a QoQ basis in 1Q22, the seasonally adjusted flash GDP registered a rise of 0.2% in Germany, higher than market expectations of an advance of 0.1%. In prior quarter, GDP had registered a drop of 0.3%.

In April, the final manufacturing PMI fell to a level of 54.60 in Germany, compared with a level of 56.90 in the prior month. The preliminary figures had indicated a drop to 54.10. Markets were expecting manufacturing PMI to fall to a level of 54.10.

Retail sales in Germany eased 0.1% on a MoM basis in March, compared with a revised rise of 0.2% in the prior month. Market anticipations were for retail sales to climb 0.3%.

The final manufacturing PMI in France recorded a rise to 55.70 in April, compared with a level of 54.70 in the previous month. The preliminary figures had indicated an advance to 55.40. Markets were expecting manufacturing PMI to advance to 55.40.

Compared with a reading of 56.50 in the prior month, the final manufacturing PMI eased to 55.50 in the eurozone, in April. The preliminary figures had recorded a drop to 55.30. Market anticipations were for the manufacturing PMI to ease to a level of 55.30.

The final consumer confidence index registered an unexpected drop to -22.00 in the eurozone, in April. The consumer confidence index had recorded a level of -18.70 in the prior month. The preliminary figures had recorded a rise to -16.90.

In the eurozone, the economic sentiment indicator dropped unexpectedly to a level of 105.00 in April. The economic sentiment indicator had registered a revised reading of 106.70 in the previous month.

In April, the industrial confidence index dropped unexpectedly to 7.90 in the eurozone. The industrial confidence index had registered a revised reading of 9.00 in the prior month.

The flash CPI registered a rise of 0.6% on a monthly basis, in April, in the eurozone. The CPI had climbed 2.4% in the prior month.

On a quarterly basis, the seasonally adjusted flash GDP in the eurozone rose 0.2% in 1Q22, compared with an advance of 0.3% in previous quarter. Market anticipations were for GDP to climb 0.3%.

In the US, the final Markit manufacturing PMI registered a rise to 59.20 in April, lower than market expectations of a rise to 59.70. The Markit manufacturing PMI had registered a level of 58.80 in the prior month. The preliminary figures had recorded a fall to 58.20.

The ISM manufacturing activity index eased unexpectedly to 55.40 in April, compared with a level of 57.10 in the prior month.

Caixin/Markit manufacturing PMI index eased to 46.00 in April, in China. In the previous month, Caixin/Markit manufacturing PMI index had recorded a reading of 48.10.

Corporate Updates

South Africa

Impala Platinum Holdings Limited (JO:IMPJ): The mining company, in its 3Q22 production report, announced a 3.0% decrease in total 6E concentrate volumes to 2.38mn ounces, with a 4.0% decline in managed volumes to 1.70mn ounces and a 3.0% decrease in JV production to 407,000 ounces, partially offset by a 1.0% increase in third-party receipts of 277,000 ounces. Gross 6E refined production declined by 6.0% to 2.35mn ounces due to the timing and extent of processing maintenance. 6E sales volumes of 2.38mn ounces were 4.0% lower than the prior comparable period.

Reinet Investments SCA: The investment company announced that as at 31 March 2022, the net asset value (‘NAV’) per share of Reinet Fund amounted to EUR34.63 (31 December 2021: EUR30.12) based on 171.30mn shares in issue.

Rumblings about Russian oil supply disruption push prices up: Oil prices rose for a fourth day as fears of Russian supply disruption trumped Covid-19 lockdowns in China, the world’s biggest crude importer.

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