The Trader's Update, 10 February 2023
Realeboha Molaba
Actuarial Junior Consultant; Actuarial Science Honours Graduate from the University of Cape Town; Actuarial Science and Mathematical Statistics Graduate from the University of the Witwatersrand
Segment 1: International Markets
European Markets
Markets closed lower on Friday as investors assessed the latest economic outlook data and potential further monetary policy tightening from the U.S. Fed, i.e.:
The Stoxx 600 closed 1% lower with all major sectors closing in the red.
On the individual shares movement, German fresh food delivery HelloFresh company fell by around 11.5% during the afternoon trading session on news that it is to trail its own delivery fleet. Swedish aerospace and defence company Saab AB surged by more around 10% after reporting a strong operating profit for the fourth quarter. Swedish outdoor equipment conglomerate dropped by 15% following the release of the company's fourth-quarter earnings report which showed that the company's net sales dropped by 21% and its net income amounted to a loss of US$1.6 million (16 million Swedish krona).
On the data front, the U.K. Office for National Statistics showed that the economy posted a net zero growth for the fourth quarter of 2022 and the economy contracted by 0.5% in December which was larger than expected. The Bank of England forecasted that the U.K. economy would enter a five-quarter recession in the first quarter of the current year.
Asia-Pacific Markets
Hong Kong
The Hang Seng closed 2.01% lower at 21,190.42.
China
The country's CPI rose by 2.1% year-on-year in January and it marked the fastest pace in the CPI growth in three months. Polled economists expected a 2.2% rise.
Broader markets closed lower, i.e.:
Japan
The country's wholesale prices rose by 9.5% year-on-year according to the corporate goods price index (CGPI) which measures the price companies charge each other for their goods and services. Polled Reuters's economists expected an increase of 9.6%.
Broader markets closed higher, i.e.:
South Korea
Markets closed lower, i.e.:
Australia
The Reserve Bank of Australia issued a monetary policy statement which showed that the Bank aims to implement further rate hikes after hiking the repo rate by 25bps to 3.25% earlier in the week.
The S&P/ASX 200 closed 0.76% higher at 7,433.70.
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U.S. Markets
Equity markets closed lower on indications that the U.S. Federal Reserve may implement rate hikes, i.e.:
International Flavors & Fragrances was the worst-performing stock in the S&P 500 on the release of disappointing quarterly results which showed that sales were declining and an analyst lowered the stock's target price. The maker of Barbie dolls and Hot Wheels cars Mattel plunged after showing a decline in sales over the holiday quarter and its 2023 profit forecast missed estimates. Medical specialties company Baxter International fell after it announced it plans to cut jobs and released earnings and a trading guidance that missed estimates.
The negative market sentiment towards parent company Google's new AI chatbot sent the Alphabet (GOOGL) stock tumbling for the second consecutive day. Cloud-based software company Salesforce rose on news that news activist investor Dan Loeb's Third Point LLC has acquired a stake in the company.
Entertainment giant Walt Disney Company closed higher after the release of strong quarterly results and the issuance of a cost-cutting plan. Casino stocks MGM Resorts International and Wynn Resorts traded higher on the release of strong earnings results. Auto parts retailer O'Reilly Automotive shares surged after it posted record sales.
The yield on the 10-year Treasury Note advanced by 82bps to 3.68%.
The Labor Department reported initial jobless claims data for the week ended February 4 and showed that they rose by 13,000.
Segment 2: African Markets Segment
Nigeria
Analysts believe that if the e-payment alternative solutions in the country were efficiently working, the cash scarcity problem the country is facing due to the new note redesign policy could have been avoided.
Ethiopia
The government announced the sale of 45% of the capital stake in public operator Ethio Telecom with pursuit of the government aiming to achieve partial privatisation of the state entity.
Benin
The government has ramped up the volumes of locally processed cotton. 40,000 tons of seeds have been processed already. This represents around 12% of the national production.
Segment 3: South African Markets
Standard Bank expects the local economy to grow by around 1.3% in 2023 and is in line with the International Monetary Fund's forecasts but is way ahead of the South African Reserve Bank's forecast of a 0.3% growth.
According to the latest monthly survey of economists, the probability of a recession in the current year stands at 68%, up from odds of 45% in January.
According to a survey released by global consultancy group NielsenIQ, around half of South African consumers who were surveyed noted that their financial position worsened in the past year. They noted that they only disposable income to cover food, shelter and basic goods costs.
Almost all of the big short-term insurers plan to remove grid failure cover from their policies in the current year as loadshedding gains momentum and has become a more permanent solution with Eskom announcing that the country would be continuously loadshed for the next 24 months
Segment 4: JSE Friday Market Wrap