SOUTH AFRICA MARKET REVIEW
- South African markets closed in the red yesterday, dragged down by broad based losses in real estate and mining sector stocks.
- Real estate property companies, Delta Property Fund, Arrowhead Properties and Dipula Income Fund (JO:DIBJ) plunged 5.1%, 3.0% and 1.9%, respectively.
- Mining sector companies, Anglo American (JO:AMSJ), BHP Group (JO:BHPJ) and Kumba Iron Ore (JO:KIOJ) shed 3.3%, 2.5% and 2.3%, respectively.
- On the flipside, technology company, EOH Holdings (JO:EOHJ) surged 5.2%.
- Retail companies, Massmart Holdings (JO:MSMJ), Lewis Group (JO:LEWJ) and Shoprite Holdings (JO:SHPJ) advanced 4.3%, 1.2% and 0.9%, respectively.
- Banking sector companies, Capitec Bank Holdings (JO:CPIJ), Nedbank Group (JO:NEDJ) and Standard Bank (JO:SBKJ) Group rose 3.4%, 1.1% and 0.5%, respectively.
- The JSE All Share index declined 0.6% to close at 68,156.21.
- The UK market finished firmer yesterday, after the Bank of England (BoE) left key interest rates unchanged.
- BT Group (LON:BT) surged 11.0%, after the company raised its FY22 earnings outlook and dividend payments, despite reporting a fall in its 1H22 profits amid higher costs.
- JD Sports Fashion (LON:JD) rose 3.7%, even after its acquisition for Footasylum was prohibited by the UK Competition and Markets Authority, after an in-depth investigation identified certain competition concerns.
- On the contrary, J Sainsbury (OTC:JSAIY) shed 2.5%, despite reporting an increase in its 1H22 profits, on account of higher grocery sales and cost cuts.
- Hikma Pharmaceuticals (LON:HIK) dropped 1.3%, even after reporting robust trading across its businesses and raising its FY21 guidance.
- The FTSE 100 index advanced 0.4% to close at 7,279.91.
US MARKET REVIEW
- US markets ended mostly higher yesterday, as investors cheered the US Federal Reserve’s decision to not increase key interest rates and following the release of domestic economic data which indicated towards a rebound in the economy.
- Qualcomm (NASDAQ:QCOM) soared 12.7%, after the company reported robust 4Q21 results as well as anticipated an increase in its FY22 growth.
- Nvidia Corporation surged 12.0%, on the back of reports that the company is likely to gain from the Metaverse fad gripping the big tech industry.
- The S&P 500 rose 0.4% to settle at 4,680.06, while the DJIA index declined 0.1% to close at 36,124.23.
- The NASDAQ index climbed 0.8% to end the trading session at 15,940.31.
ASIA MARKET REVIEW
- Asian markets are trading lower this morning, despite overnight gains on Wall Street.
- In Japan, optical products company, Nikon Corporation (T:7731) has plummeted 8.3%.
- On the flipside, semiconductor company, Sumco Corporation (T:3436) Corporation has soared 8.2%.
- In Hong Kong, residential property developer, Kaisa Group Holdings (HK:1638) has plunged 15.1%, after the company announced that its finance unit missed a payment on a wealth management product, adding to worries about a cash crunch at the debt-strapped company.
- On the contrary, automobile company, Geely Automobile Holdings (HK:0175) has added 1.0%.
- In South Korea, chemicals company,Lotte Fine Chemical (KS:004000) has shed 5.7%, Meanwhile, LG Electronics (KS:066570) has added 0.4%.
- The Nikkei 225 index is trading 0.7% lower at 29,575.33.
- The Hang Seng index has declined 1.1% to trade at 24,955.40, while the Kospi index is trading 0.6% lower at 2,965.46.
COMMODITIES
- At 06:00 SAST today, Brent spot prices rose 0.7% to trade at $81.52/bl, reversing the previous session’s losses.
- Yesterday, Brent spot prices fell 0.8% to settle at $80.94/bl, after reports stated that Saudi Arabia's oil output will soon surpass 10.00mn barrels per day (bpd) for the first time since the outset of the COVID-19 pandemic. Meanwhile, OPEC+ stated that Saudi Arabia and Russia are more confident higher oil prices will not elicit a fast response from the US shale industry, as a result reflecting a desire to rebuild their revenue and supporting the case against raising OPEC+ output more quickly.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 0.9% to $5.39/bushel.
- At 06:00 SAST today, gold prices advanced 0.1% to trade at $1,792.94/oz. Yesterday, gold gained 1.3% to close at $1,792.04/oz, as a weaker greenback gave a boost to the safe haven yellow metal.
- Yesterday, copper rose 0.5% to close at $9,699.00/mt. Aluminium closed 4.0% lower at $2,532.36/mt.
CURRENCIES
- Yesterday, the South African rand strengthened against the US dollar. In the US, initial jobless claims dropped to its lowest level since the COVID-19 pandemic, indicating towards a rebound in the domestic labour market conditions. Meanwhile, US trade deficit widened in September.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 8.11%. Further, the yield on 2023 bond declined to 9.52%, while that for the longer-dated 2030 issue fell to 5.42%.
- At 06:00 SAST, the US dollar is trading 0.1% higher against the South African rand at R15.2384, while the euro is trading 0.1% higher at R17.5977. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R20.5701.
- Yesterday, the euro declined against most of the major currencies. In Germany, factory orders rallied in September, buoyed by higher demand for investment goods, indicating that a recovery in supply bottlenecks would boost the production. Business activity slowed in Germany for a third month in October, amid supply bottlenecks and higher energy prices. In the eurozone, business activity grew at its slowest pace in October, as supply chain bottlenecks and logistical constrains related to the COVID-19 pandemic giving a boost to input prices. Growth in the eurozone service sector rose at a slower pace in October, with public health concerns dampening demand. The bloc’s producer price index (PPI) rose more than expected in September amid rising cost pressures.
- At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.1548, while it has weakened 0.1% against the British pound to trade at GBP0.8554.
ECONOMIC UPDATES
- The services PMI in Spain dropped to 56.60 in October, less than market expectations for a drop to 55.80. The services PMI had registered a level of 56.90 in the previous month.
- In October, the services PMI in Italy registered a drop to 52.40, higher than market expectations of a fall to 54.50. The services PMI had recorded a level of 55.50 in the previous month.
- In October, the final services PMI advanced to 56.60 in France, in line with market expectations of an advance to a level of 56.60. In the previous month, services PMI had recorded a reading of 56.20. The preliminary figures had also recorded an advance to 56.60.
- In October, the final services PMI fell to a level of 52.40 in Germany, meeting market expectations of a drop to a level of 52.40. Services PMI had registered a reading of 56.20 in the previous month. The preliminary figures had also indicated a fall to 52.40.
- In September, the seasonally adjusted factory orders in Germany registered a rise of 1.3% on a monthly basis, compared with market expectations of a drop of 2.1%. In the previous month, factory orders had fallen 7.7%.
- The final services PMI in the eurozone eased to 54.60 in October, compared with a reading of 56.40 in the prior month. Market anticipations were for services PMI to fall to 54.70. The preliminary figures had indicated a drop to 54.70.
- On a MoM basis, the PPI in the eurozone advanced 2.7% in September, more than market expectations for an advance of 2.2%. In the previous month, the PPI had advanced 1.1%.
- The preliminary unit labor costs in non-farm businesses in the US recorded a rise of 8.3% in 3Q21 on a quarterly basis, more than market expectations for an advance of 7.0%. The unit labor costs in non-farm businesses had climbed 1.1% in the prior quarter.
- The seasonally adjusted number of initial jobless claims fell to a level of 269.00 K in the week ended 30 October 2021, in the US, compared with a revised level of 283.00 K in the previous week.
- Trade deficit in the US widened to $80.90bn in September, compared with market expectations of a trade deficit of $80.50bn. The US had registered a trade deficit of $72.80bn in the prior month.
CORPORATE UPDATES
SOUTH AFRICA
- MTN (JO:MTNJ) Group Limited: The telecommunications company, in its quarterly update for the period ended 30 September 2021, indicated that its group service revenue rose by 19.1%. Group earnings before interest, tax, depreciation and amortisation (EBITDA) advanced by 24.1% and group EBITDA margin improved to 45.0%, maintaining strong operating leverage supported by its expense efficiency programme. The results were underpinned by strong operational execution and commercial momentum, which helped to drive service revenue growth ahead of medium-term targets at the company’s large operations. In the quarter, the company added 0.20mn subscribers to reach 271.90mn, adversely impacted by the decline in subscribers in MTN Nigeria, which resulted from the revised registration regulations in Nigeria. Excluding Nigeria, total subscribers were up by 1.60mn.
- Truworths International Limited (JO:TRUJ): The retail company, in its business update, stated that Group retail sales for the 1Q22 period decreased by 1.2% to R3.90bn, compared to the same period of the prior year. In the current period, account sales comprised 49.0% of Group retail sales, with account and cash sales decreasing by 0.8% and 1.7%, respectively, relative to the prior period.
- Afrimat Limited (JO:AFTJ): The building materials supplier, in its 1H21 results, reported that its revenue advanced 55.4% from the same period of the preceding year to R2.42bn. Its diluted EPS stood at 282.20c, compared with 181.90c recorded in the corresponding period of the previous year.
- Afrimat shares jump as first-half profit climbs 60.5%: Afrimat shares jumped as much as 12.0% in intraday trade after the building materials and mining company reported a 60.5% rise in first-half profits, saying the momentum will carry into the second half of the financial year.