South Africa Market Review
South African markets closed in the red on Friday, dragged down by broad based losses in retail sector stocks. Cie Financiere Richemont (JO:CFRJ) S.A. plummeted 12.9%, after the luxury goods company indicated towards a global environment that is the “most unsettled” it has experienced in several years. Real estate companies, Delta Property Fund (JO:DLTJ), Dipula Income Fund (JO:DIBJ) and Fortress REIT plunged 5.0%, 2.4% and 1.0%, respectively. Gold miners, Sibanye Stillwater (JO:SSWJ), Gold Fields (JO:GFIJ) and Harmony Gold Mining declined 2.5%, 1.9% and 1.2%, respectively. Banks, Capitec Bank (JO:CPIJ) Holdings and Absa (JO:ABGJ) Group eased 1.1%, each. On the flipside, platinum miners, Impala Platinum (JO:IMPJ) Holdings, Royal Bafokeng Platinum (JO:RBPCBe) and Anglo American (JO:AMSJ) Platinum advanced 2.9%, 1.3% and 1.1%, respectively. The JSE All Share index declined 1.0% to close at 67,575.28.
UK Market Review
The UK market finished firmer on Friday, after China’s decision to support its economic rebound lifted investor sentiment. Insurance companies, St. James's Place and Prudential (LON:PRU) gained 3.9% and 3.0%, respectively. Telecommunication companies, BT Group (LON:BT) and Vodafone Group (LON:VOD) advanced 3.0% and 2.2%, respectively. Real estate companies, Berkeley Group (LON:BKGH) Holdings and Taylor Wimpey (LON:TW) added 2.1% and 1.8%, respectively. Travel and leisure companies, International Consolidated Airlines Group (LON:ICAG) S.A., Whitbread (LON:WTB) and InterContinental Hotels Group (LON:IHG) advanced 2.1%, 1.9% and 1.6%, respectively. On the flipside, retailers, J Sainsbury (OTC:JSAIY), B&M European Value Retail S.A. and JD Sports Fashion (LON:JD) declined 1.8%, 1.5% and 0.6%, respectively. The FTSE 100 index advanced 1.2% to close at 7,389.98.
US Market Review
US markets ended mostly higher on Friday, after the People’s Bank of China slashed its five-year loan rate, in order to shore up weak housing sales by reducing mortgage costs. Technology company, salesforce.com (NYSE:CRM) advanced 2.6%. On the flipside, Deere plunged 14.1%, even after the agricultural equipment manufacturing company posted better than expected 2Q22 profits and revenues. Applied Materials (NASDAQ:AMAT) declined 3.9%, after the company reported less than expected 2Q22 revenues and also posted a cut in its FY22 earnings guidance, amid continued supply chain bottlenecks. The S&P 500 index marginally rose to settle at 3,901.36, while the DJIA index marginally advanced to close at 31,261.90. The NASDAQ index eased 0.3% to end the trading session at 11,354.62.
Asia Market Review
Asian markets are trading mostly higher this morning, tracking Friday’s gains on Wall Street. In Japan, transport company, Kawasaki Kisen Kaisha (TYO:9107) has advanced 3.8%. On the flipside, Tosoh Corporation has eased 3.9%. In Hong Kong, sports products company, Anta Sports Products (HK:2020) has shed 4.6%. On the contrary, e-commerce company, JD.com has added 1.0%. In South Korea, Playgram Company has soared 7.1%. On the other hand, SsangYong Motor (KS:003620) Company has plummeted 19.2%. The Nikkei 225 index is trading 0.5% higher at 26,872.19. The Hang Seng index has declined 1.9% to trade at 20,321.38, while the Kospi index is trading marginally higher at 2,639.25.
Commodities
At 06:00 SAST today, Brent spot prices fell 1.0% to trade at $113.14/bl, reversing Friday’s gains.
On Friday, Brent spot prices rose 1.5% to settle at $114.23/bl, as a planned European Union (EU) ban on Russian oil and an ease in COVID-19 lockdown restrictions in China defied concerns that a slowdown in global economic growth will dent oil demand. Meanwhile, Baker Hughes reported that the number of oil drilling rigs rose by 13 to 576 in the week ended 20 May.
On Friday, the Illinois North Central No.2 Yellow corn spot prices fell 0.6% to $7.70/bushel.
At 06:00 SAST today, gold prices advanced 0.4% to trade at $1,854.10/oz. On Friday, gold gained 0.3% to close at $1,846.50/oz, as persistent geo-political tensions between Russia and Ukraine gave a boost to the safe haven yellow metal.
On Friday, copper declined 0.1% to close at $9,451.00/mt. Aluminium closed 1.3% higher at $2,935.00/mt.
Currencies
On Friday, the South African rand weakened against the US dollar. In South Africa, the government has rejected nearly all of the public sector unions’ double-digit pay hike demands, demonstrating its commitment to keep its ballooning wage bill in check and setting it on a collision course with the more than 1.30mn strong workforce.
The yield on benchmark government bonds fell on Friday. The yield on 2026 bond fell to 8.19%, while that for the longer-dated 2030 issue fell to 9.73%.
At 06:00 SAST, the US dollar is trading 0.4% lower against the South African rand at R15.7842, while the euro is trading 0.1% lower at R16.7213. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R19.8056.
On Friday, the euro declined against most of the major currencies. In Germany, producer prices advanced sharply in April, posting the biggest increase ever recorded, boosted by higher energy prices. In the eurozone, consumer confidence improved in May despite an ongoing war between Russia and Ukraine and an increase in the cost of living.
At 06:00 SAST, the euro advanced 0.3% against the US dollar to trade at $1.0593, while it has weakened 0.2% against the British pound to trade at GBP0.8442.
Economic Updates
Retail sales in the UK climbed 1.4% on a MoM basis in April, compared to a revised fall of 1.2% in the previous month. Market anticipations were for retail sales to drop 0.2%.
In Switzerland, industrial production registered a rise of 7.9% in 1Q22 on an annual basis. In the prior quarter, industrial production had climbed by a revised 7.3%.
The producer price index (PPI) in Germany rose 2.8% on a MoM basis in April, more than market expectations for a rise of 1.4%. The PPI had recorded a rise of 4.9% in the previous month.
The preliminary consumer confidence index in the eurozone recorded a rise to -21.10 in May, lower than market expectations of a rise to -21.50. In the prior month, the consumer confidence index had registered a reading of -22.00.
Corporate Updates
South Africa
The Foschini Group (JO:TFGJ) Limited: The retail company, in its 4Q22 trading statement, announced that group retail turnover growth stood at 23.7% compared with the same period of the previous year. The company posted another record quarter turnover performance from TFG Africa in terms of Rands achieved with retail turnover growth of 16.1% in 4Q22 compared to the same period of the prior year, which is indicative of further, significant market share gains. There was strong cash retail turnover growth for TFG Africa of 18.0% for 4Q22 compared with 4Q21 and 35.9% for the 12 months ended 31 March 2022.
Richemont cautious on China growth as lockdowns weigh: Luxury goods group Richemont struck a cautious note over growth in China after its full-year profit disappointed, sending its shares sharply lower and weighing on the sector.
Shoprite and Massmart (JO:MSMJ) deal one step closer to approval: Massmart, the owner of Game and Makro, says the Competition Commission has recommended the approval of a R1.36bn sale of its fresh-food assets to Shoprite.