Markets Up, Gains In Real Estate Property Stocks, Rise in US Inflation

  • Market Overview

South Africa Market Review

South African markets closed in the green on Friday, boosted by broad based gains in real estate property stocks. Attacq (JO: ATTJ ), Emira Property Fund (JO: EMIJ ) and Growthpoint Properties (JO: GRTJ ) soared 11.7%, 4.7% and 2.6%, respectively. Retailers, Cie Financiere Richemont (JO: CFRJ ) S.A., Lewis Group (JO: LEWJ ) and Mr Price Group (JO: MRPJ ) jumped 9.6%, 3.7% and 1.4%, respectively. Fresh food manufacturing, RFG Holdings surged 9.5%, after the group announced that it is looking to retrieve rising costs in 1H22. Diversified miners, Kumba Iron Ore (JO: KIOJ ) and African Rainbow Minerals (JO: ARIJ ) gained 3.5% and 2.0%, respectively. Financial companies, Absa (JO: ABGJ ) Group, FirstRand (JO: FSRJ ) and Capitec Bank (JO: CPIJ ) Holdings advanced 2.9%, 2.3% and 2.2%, respectively. The JSE All Share index advanced 1.4% to close at 70,485.46.

UK Market Review

US markets ended higher on Friday, after the US inflation rate rose with its smallest monthly increase in April due largely to a decline in gas prices. Marvell Technology soared 6.7%, after the semiconductor company reported robust earnings in 1Q23 results and better than expected guidance for 2Q23. Gap advanced 4.3%, despite reporting a wider than expected loss in 1Q22 and downgraded its forecast for FY22. Costco Wholesale Corporation (NASDAQ: COST ) added 1.2%, after it reported more than expected revenue in its 3Q22 results. The S&P 500 index rose 2.5% to settle at 4,158.24, while the DJIA index advanced 1.8% to close at 33,212.96. The NASDAQ index climbed 3.3% to end the trading session at 12,131.13.

US Market Review

The UK market finished firmer on Friday. Meanwhile, British Finance Minister, Rishi Sunak, stated that the new cost-of-living support package would have a minimal impact of less than 1.0% point on inflation. Financial services companies, Scottish Mortgage Investment Trust (LON: SMT ) and Schroders (LON: SDR ) surged 6.6% and 1.5%, respectively. On the flipside, pharmaceutical company, GlaxoSmithKline (LON: GSK ) declined 1.2%, even as it announced that its two-dose vaccine schedule for its Cervarix treatment in girls aged between 9 to 14 years for the prevention of cervical cancer got approved by China's National Medical Products Administration. BP (LON: BP ) eased 1.1%, after it said that it would review its North Sea investments after the government unveiled a windfall tax on oil and gas producers. The FTSE 100 index advanced 0.3% to close at 7,585.46.

Asia Market Review

Asian markets are trading higher this morning, tracking Friday’s gains on Wall Street. In Japan, electronics company, Sony Group Corporation has gained 4.5%. On the flipside, transport company, Kawasaki Kisen Kaisha (TYO: 9107 ) has eased 2.0%. In Hong Kong, sports products company, Anta Sports Products (HK: 2020 ) has advanced 4.2%. On the contrary, Xinyi Glass Holdings (HK: 0868 ) has dropped 0.6%. In South Korea, electronics companies, LG Electronics (KS: 066570 ) and Samsung Electronics (KS: 005930 ) have added 2.4% and 1.2%, respectively. The Nikkei 225 index is trading 2.0% higher at 27,314.83. The Hang Seng index has advanced 1.9% to trade at 21,096.15, while the Kospi index is trading 1.3% higher at 2,670.09.

Commodities

At 06:00 SAST today, Brent spot prices rose 1.2% to trade at $120.28/bl, amid hopes that the European Union (EU) would reach an agreement on Russian oil embargo ahead of a meeting on a sixth package of sanctions against Moscow for its invasion of Ukraine.

On Friday, Brent spot prices rose 1.0% to settle at $118.81/bl, amid a start of peak US demand season, and as European nations negotiate over whether to impose an outright ban on Russian crude oil . Meanwhile, Baker Hughes reported that the US oil and gas rig count fell by 1 to 727 in the week ended 27 May.

On Friday, the Illinois North Central No.2 Yellow corn spot prices rose 1.4% to $7.73/bushel.

At 06:00 SAST today, gold prices advanced 0.2% to trade at $1,858.31/oz. On Friday, gold gained 0.2% to close at $1,853.72/oz, as geo-political tensions between Russia and Ukraine boosted the demand for the safe haven yellow metal.

On Friday, copper rose 1.2% to close at $9,453.50/mt. Aluminium closed 0.2% higher at $2,844.00/mt.

Currencies

On Friday, the South African rand strengthened against the US dollar. In the US, consumer spending advanced more than expected in April as households increased purchases of goods and services and as the surge in inflation slowed, which could strengthen the economic growth in 2Q amid rising fears of a recession. Personal income rose with wages accounting for the largest part of the increase. Michigan consumer sentiment dropped to a 10-year low in May.

The yield on benchmark government bonds fell on Friday. The yield on 2026 bond fell to 8.23%. Further, the yield the longer-dated 2030 issue fell to 9.71%.

At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R15.5737, while the euro is trading marginally lower at R16.7358. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R19.6938.

On Friday, the euro declined against most of the major currencies. In Germany, Economy Minister, Robert Habeck expressed fears that the EU’s unity has started to deteriorate ahead of a summit to discuss an oil embargo against Russia and plans to cut dependence on Russian energy.

At 06:00 SAST, the euro advanced 0.1% against the US dollar to trade at $1.0747, while it has marginally gained against the British pound to trade at GBP0.8499.

Economic Updates

On an annual basis, retail sales in Spain registered a rise of 1.5% in April, compared with market expectations of a drop of 1.9%. Retail sales had dropped 4.2% in the prior month.

Advance goods trade deficit in the US dropped to $105.90bn in April, from an advance goods trade deficit of $125.90bn in the prior month.

Core personal consumption expenditure in the US registered a rise of 4.9% in April on an annual basis, at par with market expectations of an advance of 4.9%. In the previous month, core personal consumption expenditure had advanced 5.2%.

In April, personal income registered a rise of 0.4% on a monthly basis in the US, lower than market expectations of a rise of 0.5%. In the previous month, personal income had risen 0.5%.

On a MoM basis in April, personal spending advanced 0.9% in the US, more than market expectations for a rise of 0.7%. Personal spending had climbed by a revised 1.4% in the previous month.

On a MoM basis, preliminary the seasonally adjusted wholesale inventories registered a rise of 2.1% in the US, in April, higher than market expectations of an advance of 2.0%. In the prior month, the wholesale inventories had climbed by a revised 2.7%.

In the US, the final Reuters/Michigan consumer sentiment index registered a drop to 58.40 in May, higher than market expectations of a fall to a level of 59.10. In the prior month, the Reuters/Michigan consumer sentiment index had recorded a level of 65.20. The preliminary figures had indicated a fall to 59.10.

Corporate Updates

South Africa

Hosken Consolidated Investments Limited (JO: HCIJ ): The investment trust company, in its FY22 results, indicated that its revenue rose to R10.71bn from R8.19bn posted in the previous year. Its diluted EPS increased from the prior year to R25.68.

Rebosis Property Fund Limited: The real estate investment trust company, in its 1H22 results, reported that its revenue declined 1.6% from the same period of the preceding year to R822.09mn. Its diluted EPS stood at 153.68c, compared with 146.36c recorded in the corresponding period of the previous year.

Murray & Roberts (JO: MURJ ) boasts record order book after R22.00bn contract win: Engineering group Murray & Roberts says its order book has grown to a record R80.00bn after subsidiary Clough won yet another hefty contract in Australia. Clough has won a R22.00bn share of the development of Perdaman Industries urea plant in Western Australia, the group announced.

Implats pushes back timing on RBPlat acquisition amid Northam (JO: NHMJ ) intervention: Impala Platinum (JO: IMPJ ) has pushed back the timing on its proposed acquisition of a controlling stake in Royal Bafokeng Platinum (JO: RBPCBe ) (RBPlat) by about seven weeks after an intervention by Northam in competition proceedings.

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