Morning Commentary: Capital & Counties, MTN Group, American Express

  • Market Overview
  • Editor's Pick

SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red yesterday, after the US Federal Reserve ( Fed ) announced that it would increase its speed in tapering its stimulus programme and hike interest rates at a faster pace than previously expected.
  • Gold mining companies, Harmony Gold Mining, Gold Fields (JO: GFIJ ) and AngloGold Ashanti (JO: ANGJ ) plunged 8.5%, 7.3% and 6.0%, respectively.
  • Platinum miners, Impala Platinum (JO: IMPJ ) Holdings, Royal Bafokeng Platinum (JO: RBPCBe ) and Northam Platinum Holdings (JO: NHMJ ) shed 4.2%, 1.7% and 0.9%, respectively.
  • Real estate stocks, Arrowhead Properties (JO: AHAJ ), Capital & Counties Properties (JO: CCOJ ) and Accelerate Property Fund (JO: APFJ ) declined 2.2%, 1.1% and 0.9%, respectively.
  • Telecommunication companies, MTN Group (JO: MTNJ ) and Telkom SA SOC (JO: TKGJ ) eased 1.8% and 1.2%, respectively.
  • The JSE All Share index declined 1.2% to close at 74,165.25.

UK MARKET REVIEW

  • The UK market finished weaker yesterday, as investors reacted to the US Fed’s hawkish comments on tapering of its bond purchase programme and on interest rate hikes.
  • Fashion retailer, Next (LON: NXT ) shed 3.3%, even after the company announced an upbeat FY22 profit outlook as well as declared a special dividend for the period, following robust Christmas sales.
  • Meanwhile, peer, B&M European Value Retail SA (LON: BMEB ) dropped 2.3%, despite the firm’s strong performance over the Christmas period.
  • On the flipside, financial companies, Standard Chartered (LON: STAN ), Lloyds Banking Group (LON: LLOY ) and HSBC Holdings (LON: HSBA ) gained 3.7%, 2.6% and 2.1%, respectively.
  • Real estate stocks, British Land (LON: BLND ) and Land Securities Group (LON: LAND ) advanced 1.0% and 0.6%, respectively.
  • The FTSE 100 index declined 0.9% to close at 7,450.37.

US MARKET REVIEW

  • US markets ended lower yesterday, following lower than expected domestic corporate earnings.
  • Constellation Brands (NYSE: STZ ) declined 3.4%, after the company reported a decline in its 3Q22 net income.
  • Walgreens Boots Alliance (NASDAQ: WBA ) dropped 2.9%, even though the company reported robust 1Q22 results and raised its FY22 earnings outlook.
  • On the flipside, Bed Bath & Beyond Inc (NASDAQ: BBBY ) soared 8.0%, despite the company reporting a loss in its 3Q21 results, following a lesser than expected increase in sales.
  • Insurance companies, Travelers (NYSE: TRV ) and American Express (NYSE: AXP ) added 1.6% and 0.7%, respectively.
  • The S&P 500 index fell 0.1% to settle at 4,696.05, while the DJIA index declined 0.5% to close at 36,236.47.
  • The NASDAQ index eased 0.1% to end the trading session at 15,080.87.

ASIA MARKET REVIEW

  • Asian markets are trading mostly higher this morning, despite overnight losses on Wall Street.
  • In Japan, ferronickel products manufacturer, Pacific Metals has shed 2.6%.
  • On the contrary, banker, Shizuoka Bank Ltd (T: 8355 ) has gained 3.1%.
  • In Hong Kong, brewing company, Budweiser Brewing Company (HK: 1876 ) APAC has added 2.2%.
  • However, real estate company, Shimao (HK: 0813 ) has plunged 10.3%, amid reports that it defaulted on a trust loan.
  • In South Korea, electronics company, LG Electronics (KS: 066570 ) has gained 1.1%.
  • On the other hand, pharmaceutical company, Hyundai Pharmaceutical has plunged 8.9%.
  • The Nikkei 225 index is trading 0.2% lower at 28,443.92.
  • The Hang Seng index has gained 1.1% to trade at 23,315.59, while the Kospi index is trading 1.0% higher at 2,950.11.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices rose 0.6% to trade at $82.62/bl, extending the previous session’s gains.
  • Yesterday, Brent spot prices rose 2.5% to settle at $82.09/bl, following an increase in OPEC+ oil output in December, indicating towards capacity constraints that are limiting supply as global demand rebounds from the COVID-19 pandemic. Further, fresh violence erupted in Kazakhstan's main city of Almaty yesterday as Russia sent paratroopers to put down a countrywide uprising in one of Moscow's closest former Soviet allies.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 0.1% to $5.88/bushel.
  • At 06:00 SAST today, gold prices advanced 0.1% to trade at $1,792.71/oz. Yesterday, gold declined 1.1% to close at $1,791.16/oz, as a stronger greenback and US Treasury yields, buoyed by the US Fed’s meeting minutes which indicated towards quicker increases in interest rates, dragged down demand for the safe haven yellow metal
  • Yesterday, copper declined 1.7% to close at $9,542.75/mt. Aluminium closed 0.1% lower at $2,909.28/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In the US, initial jobless claims increased last week, following a surge in the Omicron variant of Covid-19 impacting businesses. Services sector activity in the US tumbled in December, amid rising inflation, supply and capacity constraints along with labour and material shortages. New orders dropped to the lowest in 10 months in November, amid subdued inventory sentiment. Also, in the US, the domestic economy has been affected by a winter wave of coronavirus cases, fuelled by the Omicron variant. Airline travel has been severely disrupted. Although businesses have not shut down, services declined as workers call in sick or need to isolate.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.92%. Further, the yield on 2023 bond advanced to 5.15%, while that for the longer-dated 2030 issue rose to 9.41%.
  • At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R15.7273, while the euro is trading 0.1% lower at R17.7692. At 06:00 SAST, the British pound has marginally gained against the South African rand to trade at R21.3059.
  • Yesterday, the euro declined against most of the major currencies. In Germany, factory orders accelerated more than expected in November, with high foreign demand for capital and intermediate goods. Inflation eased in Germany in December. In the eurozone, the producer price index (PPI) advanced more than expected in November, buoyed by soaring energy prices.
  • At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.1298, while it has weakened 0.1% against the British pound to trade at GBP0.834.

ECONOMIC UPDATES

  • The final services PMI in the UK recorded a drop to 53.60 in December, compared with a reading of 58.50 in the prior month. The preliminary figures had recorded a fall to 53.20. Market expectations were for the services PMI to fall to a level of 53.20.
  • In November, on a monthly basis, the seasonally adjusted factory orders climbed 3.7% in Germany, more than market expectations for a rise of 2.1%. In the previous month, factory orders had dropped by a revised 5.8%.
  • In Germany, the preliminary consumer price index (CPI) registered a rise of 0.5% in December, on a MoM basis, more than market expectations for an advance of 0.4%. In the previous month, the CPI had recorded a drop of 0.2%.
  • On a MoM basis, in the eurozone, the PPI recorded a rise of 1.8% in November, more than market expectations for a rise of 1.2%. The PPI had registered a rise of 5.4% in the prior month.
  • Number of initial jobless claims recorded an unexpected rise to 207.00K in week ended 1 January 2022, in the US, compared with a revised level of 200.00K in previous week. Market expectations were for the seasonally adjusted number of initial jobless claims to ease to a level of 197.00K.
  • The US has reported a trade deficit of $80.20bn in November, from a trade deficit of $67.20bn in the previous month. Market expectations were for the nation to post a trade deficit of $77.10bn.
  • In November, factory orders in the US rose 1.6% on a MoM basis, higher than market expectations of a rise of 1.5%. In the prior month, factory orders had climbed by a revised 1.2%.
  • The ISM Services Index eased to 62.00 in the US, in December, more than market expectations for a fall to a level of 66.90. The ISM Services Index had registered a reading of 69.10 in the previous month.
  • In the US, the final non-defense capital goods orders (ex aircraft) remained steady 0.0% in November, on a monthly basis. The non-defense capital goods orders (ex aircraft) had recorded a revised rise of 0.9% in the previous month. The preliminary figures had indicated a fall of 0.1%.
  • The final durable goods orders advanced 2.6% in the US on a monthly basis, in November. In the prior month, durable goods orders had risen by a revised 0.1%. The preliminary figures had indicated an advance of 2.5%.
  • In Japan, Tokyo CPI recorded a rise of 0.8% on a YoY basis, in December. The Tokyo CPI had advanced 0.5% in the prior month.

CORPORATE UPDATES

SOUTH AFRICA

  • South32 (JO: S32J ) to restart aluminium smelter in Brazil using renewable energy: Diversified global miner South32 says it intends to spend $70.00mn (R1.10bn) to help restart the mothballed Alumar aluminium smelter in Brazil, with its share to be entirely powered by renewable energy.

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100