SA Markets Closed Red Yesterday, S&P 500 Fell well DJIA Declined

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SOUTH AFRICA MARKET REVIEW

  • South African markets closed in the red yesterday, as investors reacted to a weaker jobs data from the US, thus further indicating towards a potential delay in the US Federal Reserve’s (Fed) tapering program.
  • Real estate property stocks, Attacq (JO:ATTJ), Emira Property Fund (JO:EMIJ) and Capital & Counties Properties shed 4.9%, 0.9% and 0.5%, respectively.
  • Retail sector companies, Cashbuild (JO:CSBJ), Clicks Group (JO:CLSJ) and Shoprite Holdings declined 2.1%, 0.7% and 0.4%, respectively.
  • Mining sector companies, Exxaro (JO:EXXJ) Resources, BHP Group (JO:BHPJ) and Anglo American (JO:AMSJ) dropped 1.4%, 0.9% and 0.7%, respectively.
  • On the flipside, gold mining stocks, Harmony Gold Mining, Gold Fields (JO:GFIJ) and AngloGold Ashanti (JO:ANGJ) advanced 2.6%, 1.9% and 1.6%, respectively.
  • The JSE All Share index declined 0.2% to close at 65,988.12.

UK MARKET REVIEW

  • The UK market finished weaker yesterday, dragged down by losses in travel and leisure, insurance, and mining sector stocks.
  • Travel and leisure stocks, International Consolidated Airlines Group (LON:ICAG) SA and InterContinental Hotels Group (LON:IHG) shed 3.4% and 1.3%, respectively.
  • Insurance companies, Prudential (LON:PRU), St. James's Place and Legal & General Group (LON:LGEN) declined 2.0%, 0.9% and 0.8%, respectively.
  • Mining sector companies, Rio Tinto (LON:RIO) and Anglo American (LON:AAL) dropped 1.9% and 1.4%, respectively.
  • On the flipside, supermarket company, Ocado Group (LON:OCDO) soared 5.4%, after its US supermarket partner, Kroger (NYSE:KR) announced that it was planning to expand its delivery offering, to include the northeast of the US, as well as Florida and California.
  • The FTSE 100 index declined 0.2% to close at 7,130.23.

US MARKET REVIEW

  • US markets ended lower yesterday, amid cautious investor sentiment ahead of the release of corporate 3Q21 earnings reports.
  • Technology sector companies, Intel (NASDAQ:INTC), Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) shed 2.4%, 0.9% and 0.5%, respectively.
  • Peer, Netflix (NASDAQ:NFLX) eased 0.3%. Meanwhile, the company stated that Squid Game is its "biggest-ever series at launch," having been sampled by 111.00mn members over the span of just 25 days.
  • General Motors (NYSE:GM) rose 1.5%, after the company announced that it has reached an agreement with South Korea’s LG Electronics (KS:066570) over the costs of recalling Chevrolet Bolt electric vehicles and electric utility vehicles due to manufacturing defects in LG’s battery modules.
  • The S&P 500 index fell 0.2% to settle at 4,350.65, while the DJIA index declined 0.3% to close at 34,378.34.
  • The NASDAQ index eased 0.1% to end the trading session at 14,465.92.

ASIA MARKET REVIEW

  • Asian markets are trading mixed this morning.
  • In Hong Kong, morning trading session has been canceled due to a typhoon alert issued by the government, which is currently at signal No. 8.
  • In Japan, transport company, Kawasaki Kisen Kaisha, (T:9107) has shed 2.5%. On the contrary, steel manufacturing company, Japan Steel Works Ltd (T:5631) has advanced 3.2%.
  • In South Korea, technology company, LG Electronics has declined 2.8%, while, peer, Samsung Electronics (KS:005930) has added 0.7%. Yesterday, the Hang Seng index closed 1.4% lower to end the session at 24,962.59.
  • Today, the Nikkei 225 index is trading 0.2% lower at 28,179.72, while the Kospi index is trading 1.1% higher at 2,948.08.

COMMODITIES

  • At 06:00 SAST today, Brent spot prices fell 0.7% to trade at $83.11/bl, extending the previous session’s losses.
  • Yesterday, Brent spot prices fell 0.3% to settle at $83.66/bl, amid worries that soaring crude oil prices would overturn the global economic rebound.
  • Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 1.1% to $4.88/bushel.
  • At 06:00 SAST today, gold prices marginally advanced to trade at $1,760.56/oz. Yesterday, gold gained 0.3% to close at $1,760.18/oz, as rising global inflation gave a boost to the safe haven yellow metal.
  • Yesterday, copper declined 0.9% to close at $9,520.00/mt. Aluminium closed 0.2% higher at $3,049.75/mt.

CURRENCIES

  • Yesterday, the South African rand strengthened against the US dollar. In South Africa, manufacturing activity increased more than expected in August, showing signs of recovery from the July civil unrest and supply constraints. Moreover, the country’s mining production had increased by 2.0% ear-on-year in August, with the biggest contributors being gold, iron ore and platinum group metals (PGMs). Meanwhile, in the US, the Atlanta Fed President, Raphael Bostic stated that an increase in prices in 2021 tied to the pandemic has broadened.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.91%. Further, the yield on 2023 bond declined to 5.33%, while that for the longer-dated 2030 issue fell to 9.54%.
  • At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R14.9603, while the euro is trading 0.1% higher at R17.2831. At 06:00 SAST, the British pound has gained 0.1% against the South African rand to trade at R20.3689.
  • Yesterday, the euro declined against most of the major currencies. In Germany, economic sentiment dropped for a consecutive fifth month. However, the gauge indicated towards an easing of supply constraints leading to slight recovery. The ZEW current situation in Germany dropped in October. Meanwhile, the economic sentiment in the eurozone dropped in October.
  • At 06:00 SAST, the euro advanced 0.2% against the US dollar to trade at $1.1552, while it has marginally gained against the British pound to trade at GBP0.8486.

ECONOMIC UPDATES

  • Gold production in South Africa recorded a rise of 17.0% on an annual basis, in August. In the previous month, gold production had climbed by a revised 13.5%.
  • In South Africa, mining production rose 2.0% on a YoY basis, in August. In the prior month, mining production had registered a revised rise of 12.3%.
  • Platinum production advanced 4.4% in South Africa on an annual basis, in August. Platinum production had advanced 10.3% in the previous month.
  • On a monthly basis, the seasonally adjusted manufacturing production index in South Africa advanced 7.6% in August. In the previous month, the manufacturing production index had registered a drop of 8.0%.
  • In the UK, number of unemployment benefits claimants eased by 51.10K in September, compared with a revised decline of 88.00K jobs in the prior month.
  • In the UK, the number of people employed rose by 235.00K compared with market expectations of an advance of 243.00K jobs. The UK had registered a gain of 183.00K jobs in the previous month.
  • On a monthly basis, the wholesale price index in Germany recorded a rise of 0.8% in September. In the prior month, the wholesale price index had climbed 0.5%.
  • The current situation index registered a drop to 21.60 in Germany, in October, compared with a level of 31.90 in the previous month,
  • The economic sentiment index in Germany fell to a level of 22.30 in October, compared with a reading of 26.50 in the previous month. Markets were expecting the economic sentiment index to drop to 24.00.
  • In the eurozone, the economic sentiment index eased to 21.00 in October. In the previous month, the economic sentiment index had recorded a level of 31.10.
  • In the US, JOLTs job openings recorded a drop to 10,439.00K in August, compared with a revised level of 11,098.00K in the prior month.
  • Machinery orders in Japan slid 2.4% in August on a MoM basis, compared with an advance of 0.9% in the previous month. Market anticipations were for machinery orders to rise 1.7%.
  • Trade surplus in China expanded to $66.76bn in September, more than market expectations of a trade surplus of $46.80bn. China had posted a trade surplus of $58.34bn in the previous month.
  • In October, the preliminary business confidence index in New Zealand recorded a drop to -8.6%, compared with a reading of -7.2% in the previous month.

CORPORATE UPDATES

SOUTH AFRICA

  • Murray & Roberts Holdings Limited (JO:MURJ): The engineering services company announced that it has signed a share purchase agreement, whereby Clough North America Holding, Inc., a wholly owned subsidiary of the company, will acquire all the shares in J.J. White Incorporated from James White IV and Trusts. The maximum total consideration payable in terms of the transaction is $28.25mn, of which $5.75mn is deferred. The deferred consideration consists of $3.50mn, by promissory note and an earnout payment to a maximum of $2.25mn over a 3-calendar year period.
  • Altron (JO:AELJ) Limited: The IT services management company, in its 1H21 trading statement, stated that it expects its loss per share to be between 3.00c and 16.00c, as compared with an EPS of 69.00c, in the corresponding previous year. It expects its HEPS to be lower by between 81.0% and 100.0%, as compared with 67.00c in the same period of prior year.
  • Grand Parade Investments (JO:GPLJ) Limited: The venture capital company announced further information regarding the proposed transaction in which the company’s wholly-owned subsidiaries, Grand Foods Investments Proprietary Limited and Grand Foods Proprietary Limited, will sell all of the shares they hold in Burger King South Africa (RF) Proprietary Limited and Grand Foods Meat Plant Proprietary Limited, respectively. All conditions to the disposal capable of being fulfilled or waived prior to the closing date of the disposal have been fulfilled or waived, as the case may be. The remaining outstanding conditions are required to be fulfilled or waived on the closing date.
  • Tharisa reports record quarterly PGM production but prices ease: Chrome and platinum group metals (PGMs) miner Tharisa has reported record production for its fourth quarter ending September, and despite prices easing it is optimistic about a robust outlook for PGMs over the next five years.

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