SOUTH AFRICA MARKET REVIEW
- South African markets closed in the green yesterday, buoyed by gains in platinum and gold mining sector stocks.
- Platinum mining stocks, Anglo American Platinum (JO:AMSJ), Royal Bafokeng Platinum (JO:RBPCBe) and Northam Platinum Holdings (JO:NHMJ) gained 3.3%, 2.6% and 0.4%, respectively.
- Gold mining stocks, AngloGold Ashanti (JO:ANGJ), Gold Fields (JO:GFIJ) and Sibanye Stillwater (JO:SSWJ) advanced 3.2%, 2.8% and 1.8%, respectively.
- Retail sector companies, Cashbuild (JO:CSBJ), Cie Financiere Richemont SA (JO:CFRJ) and Massmart Holdings (JO:MSMJ) rose 3.3%, 1.6% and 1.4%, respectively.
- On the flipside, real estate property sector companies, Attacq (JO:ATTJ), Fortress REIT and Capital & Counties Properties (JO:CCOJ) shed 4.2%, 1.0% and 0.6%, respectively.
- The JSE All Share index marginally advanced to close at 66,012.78.
- The UK market finished firmer yesterday, buoyed by gains in real estate property sector stocks.
- Barratt Developments (LON:BDEV) soared 6.3%, after the company announced that demand for its homes continues to be stronger, despite a reduction in the UK government’s incentives and added that it was on track to deliver full-year performance targets.
- Peers, Persimmon (LON:PSN) and Berkeley Group Holdings (LON:BKGH) added 3.6% and 1.7%, respectively.
- On the flipside, food delivery company, Just Eat Takeaway (LON:JETJ) shed 1.7%, after the company reported a less than expected increase in its 3Q21 orders.
- Airliner, International Consolidated Airlines Group (LON:ICAG) SA declined 2.5%.
- Banking firms, Standard Chartered (LON:STAN) and Lloyds Banking Group (LON:LLOY) shed 2.7% and 1.6%, respectively.
- The FTSE 100 index advanced 0.2% to close at 7,141.82.
US Market Review
- US markets ended mostly higher yesterday, after minutes from the US Federal Reserve’s (Fed) policy meeting strengthened expectations that the central bank will start gradually reducing its $120.00bn per month bond purchases by year-end.
- BlackRock (NYSE:BLK) rose 3.8%, after the investment company reported better than expected profits and revenues as well as a more than 20.0% growth in its assets under management in its 3Q21 results.
- Qualcomm (NASDAQ:QCOM) added 1.7%, after the company announced that its board has authorized a $10.00bn share repurchase program.
- On the flipside, JPMorgan Chase (NYSE:JPM) shed 2.6%, despite reporting better than expected 3Q21 earnings.
- The S&P 500 index rose 0.3% to settle at 4,363.80, while the DJIA index marginally declined to close at 34,377.81.
- The NASDAQ index climbed 0.7% to end the trading session at 14,571.63.
ASIA MARKET REVIEW
- Asian markets are trading higher this morning, tracking overnight gains on Wall Street.
- In China, the producer price index (PPI) advanced more than expected in September, while the consumer price index (CPI) rose less than expected in the same month.
- In Hong Kong, markets are closed on account of a public holiday.
- In Japan, technology company, Panasonic (T:6752) has added 0.8%.
- On the contrary, transport company, Kawasaki Kisen Kaisha (T:9107) has plunged 5.7%.
- In South Korea, technology company, LG Electronics (KS:066570) has advanced 2.1%.
- On the flipside, chemical company, Hannong Chemicals (KS:011500) has shed 4.2%.
- On Tuesday, the Hang Seng index declined 1.4% to close at 24,962.59.
- Today, the Nikkei 225 index is trading 1.2% higher at 28,478.06, while the Kospi index is trading 1.2% higher at 2,979.63.
COMMODITIES
- At 06:00 SAST today, Brent spot prices marginally rose to trade at $83.47/bl, reversing the previous session’s losses.
- Yesterday, Brent spot prices fell 0.2% to settle at $83.46/bl, as a decline in the imports of crude oil from China indicated towards a slower growth in global crude oil demand. Moreover, the American Petroleum Institute (API) reported that crude oil inventories rose by 5.20mn bls for the week ended 8 October.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 2.1% to $4.77/bushel.
- At 06:00 SAST today, gold prices declined 0.3% to trade at $1,788.32/oz. Yesterday, gold gained 1.9% to close at $1,792.97/oz, as a weaker dollar and US Treasury bond yields boosted demand for the safe haven yellow metal.
- Yesterday, copper rose 2.5% to close at $9,759.50/mt. Aluminium closed higher at $3,050.71/mt.
CURRENCIES
- Yesterday, the South African rand strengthened against the US dollar. In South Africa, retail sales dropped for a second consecutive month in August, as firms try to recover from disruptions caused by the civil unrest in July. Meanwhile, in the US, inflation soared to a 30-year high, indicating that the rise in prices will persist in the next year. The US Fed Board Governor, Michelle Bowman stated that she would begin to withdraw some of the pandemic support for the economy by the mid of next month, amid worries that high inflation could continue longer than previously assumed.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.80%. Further, the yield on 2023 bond declined to 5.29%, while that for the longer-dated 2030 issue fell to 9.38%.
- At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R14.7974, while the euro is trading 0.1% lower at R17.1575. At 06:00 SAST, the British pound has declined 0.1% against the South African rand to trade at R20.2253.
- Yesterday, the euro declined against most of the major currencies. In Germany, the CPI was in line with expectations on a yearly basis in September. In the eurozone, industrial output declined in August, amid supply constraints causing disruptions in regional production. Meanwhile, in the UK, the economy bounced back to growth in August, amid hopes that the Bank of England (BoE) would increase its interest rates before the year end.
- At 06:00 SAST, the euro marginally advanced against the US dollar to trade at $1.1595, while it has marginally weakened against the British pound to trade at GBP0.8483.
ECONOMIC UPDATES
- Retail sales in South Africa advanced 4.9% in August on a monthly basis. Retail sales had dropped by a revised 11.1% in the prior month.
- In August, gross domestic product (GDP) in the UK advanced 0.4% on a MoM basis, lower than market expectations of a rise of 0.5%. In the prior month, GDP had recorded a revised drop of 0.1%.
- Industrial production advanced 0.8% in the UK on a MoM basis in August, compared with a revised advance of 0.3% in the previous month. Markets were expecting industrial production to climb 0.2%.
- The total trade deficit in the UK rose to GBP3.72bn in August. The UK had reported a total trade deficit of GBP2.95bn in the previous month.
- Manufacturing production in the UK climbed 0.5% on a monthly basis in August, compared with a revised fall of 0.6% in the prior month. Market anticipations were for manufacturing production to record an unchanged reading 0.0%.
- Visible trade deficit in the UK expanded to GBP14.93bn in August, following a visible trade deficit of GBP14.10bn in the previous month. Markets were anticipating the nation to record a visible trade deficit of GBP12.00bn.
- On a MoM basis, construction output slid 0.2% in August, in the UK. In the prior month, construction output had dropped by a revised 1.0%.
- House price balance dropped unexpectedly to 68.0% in the UK, in September. In the prior month, the house price balance had recorded a revised level of 72.0%.
- In September, the final CPI remained unchanged 0.0% in Germany on a monthly basis, in line with market expectations of a steady reading 0.0%. In the previous month, the CPI had recorded a steady reading of 0.0%. The preliminary figures had also indicated a steady reading of 0.0%.
- On a monthly basis, the seasonally adjusted industrial production in the eurozone eased 1.6% in August, at par with market expectations of a fall of 1.6%. Industrial production had risen by a revised 1.4% in the previous month.
- In the US, the number of mortgage applications climbed 0.2% on a weekly basis, in the week ended 08 October 2021. In the prior week, the number of mortgage applications had recorded a drop of 6.9%.
- The CPI in the US climbed 0.4% in September on a monthly basis, compared with a rise of 0.3% in the previous month. Market expectations were for the CPI to advance 0.3%.
- On a MoM basis, the CPI (ex-food & energy) in the US recorded a rise of 0.2% in September, compared with an advance of 0.1% in the previous month. Markets were anticipating the CPI (ex-food & energy) to climb 0.2%.
- The PPI climbed 10.7% in China on an annual basis in September, compared with a rise of 9.5% in the previous month. Market anticipations were for the PPI to rise 10.5%.
- On a YoY basis, in China, the CPI recorded a rise of 0.7% in September, compared with an advance of 0.8% in the prior month. Markets were anticipating the CPI to climb 0.9%.
CORPORATE UPDATES
SOUTH AFRICA
- Life Healthcare Group Holdings Limited (JO:LHCJ): The healthcare company, in its 2H21 trading statement, indicated that it recorded continued strong volume growth within Alliance Medical Group (AMG) with volumes higher than pre-COVID-19 levels in all major geographies, with revenue growth for FY21 20.0% to 22.0% higher (in British pounds) than FY20. Continued sequential improvement was experienced across all the southern African operations notwithstanding a significantly larger third COVID-19 wave impacting operations within the current period. The southern African operations have delivered between 9.0% to 11.0% revenue growth year-on-year for FY21 with a 25.0% to 27.0% increase in revenue for the 2H21 as compared to 2H20. The normalised EBITDA margin for the 2H21 period has improved to c.17.0% compared to 16.6% for the 1H21 period.
- Famous Brands (JO:FBRJ) Limited: The restaurant company, in its trading statement for the six months ended 31 August 2021, stated that it expects its EPS to be between 86.00c and 106.00c, as compared with a loss per share of 1,535.00c in the corresponding prior year period. It expects its HEPS to be between 89.00c and 109.00c as compared with a headline loss per share of 240.00c in the corresponding previous year.
- Oil loses ground as traders fret about inflation: Oil prices dropped, after a mixed finish in the previous session, amid the worry that soaring coal and natural gas prices in China, India and Europe will stoke inflation and slow global growth, reducing oil demand.