The Traders' Update, 14-15 October 2024
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: Overseas Markets
European Markets
Equity markets were trading mixed in the late morning, i.e.:
The pan-European Stoxx 600 opened 0.3% higher with telecommunications stocks leading the gains.
On the individual shares front, French luxury stocks Kering, Christian Dior and LVMH stocks fell after investors assessed the latest clues about Chinese stimulus measures. British luxury brand Burberry shares also plummeted.
Irish betting companies Entain and Flutter shares also fell on reports that the U.K. government could potentially increase taxes on online casinos and bookmakers.
Swedish telecommunications manufacturer Ericsson shares surged to the Stoxx 600 after its earnings results were better than expected even though it recorded a 4% year-on-year contraction in sales.
On the data front, the U.K. Office for National Statistics reported that the U.K.'s economy expanded by 0.2% month-on-month in August, in line with market expectations, following two months of consecutive stagnation. In the three months ended August, the economy also expanded by 0.2% compared to the 0.5% growth recorded in the three months ended in July.
The French government proposed €60 billion (US$65.6 billion) in tax hikes and spending cuts to address the country's widening budget deficit.
Asia-Pacific Markets
Hong Kong
The Hang Seng closed 0.75% lower at 21,092.87.
China
The Ministry of Finance over the weekend made an announcement that there may be more debt issuance in an attempt to stimulate the country's economic growth.
On the data front, the National Bureau of Statistics reported that consumer prices in September rose at their slowest pace in three months at 0.4% and the producer price index also fell at its fastest pace in six months by falling by 2.8%.
Mainland markets closed higher, i.e.:
Japan
Markets were closed for a public holiday on Monday.
South Korea
Korean markets closed flat to higher, i.e.:
Singapore
The Ministry of Trade and Industry announced that the country's economy expanded by 4.1% on an annualised basis in the third quarter of 2024, higher than the 2.9% growth recorded in the previous quarter. Economists had expected a 3.8% increase.
The Straits Times Index closed 0.62% higher at 3,595.91.
Australia
The S&P/ASX 200 closed 0.47% higher at 8,252.80.
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U.S. Markets
Equity markets closed higher on Monday as tech stocks pushed indices to new all-time highs, i.e.:
Power generator Vistra shares surged to the top of the S&P 500 after French investment bank BNP Paribas initiated the stock with an "outperform" rating and also established a price target of US$230. This represented an upside potential of 74% from Monday's closing stock price. The stock has been performing relatively well due to optimism around the company's opportunity to provide nuclear-generated power for artificial intelligence (AI) data centers.
Semiconductor stock Nvidia shares also rose after Wall Streets cited positive comments on the stock and Citibank analysts noted that the stock is still superior with regards to its client base in the AI accelerator market. Analysts expect GPU sales to tech hyperscalers like Alphabet (GOOGL) and Microsoft to double in this year.
Government and commercial services contractor Amentum shares rose after investment bank Truist initiated a "buy" rating on the stock and developed a price target of US$31, suggesting an upside potential of 9%. The company was recently spun off from engineering and construction firm Jacobs Solutions about a month ago.
Discount retailer Dollar Tree shares fell to the bottom of the S&P 500 after investment management firm Heartland Advisors' published report showed that the stock was one of the weakest-performing stocks in the midcap value fund in the third quarter.
Cybersecurity firm CrowdStrike Holdings shares fell on reports that Delta Air Lines cited a negative impact on its operations caused by July's outage and hence it is seeking compensation from the company. In the last week, RBC Capital analysts picked the stock to be amongst their top picks in the software industry and hence noted that the company is still navigating through the cybersecurity fallout experienced in July.
Specialty insurer Arch Capital Group shares also fell after the company announced a shakeup of its executive team.
Lithium producer Albemarle shares fell after British-Australian mining company Rio Tinto announced in the last week that it would be acquiring Albemarle's direct competitor Arcadium Lithium in an all-cash deal worth US$6.7 billion.
Segment 2: African Markets
Nigeria
The government has signed a deal with a joint venture of partners to supply gas to a US$3.5 billion Brass fertilizer and petrochemical plant.
The Finance Ministry has began de-regulating the processing sector with local fuel traders now being able to purchase petrol from the Dangote Oil Refinery. State oil company NNPC had exclusive buying rights.
Ghana
Credit ratings agency Moody's upgraded the country's sovereign long-term local and foreign currency issuer ratings.
Sub-Saharan Africa
The World Bank has cut the region's economic growth prospects from 3.4% to 3% citing increased risks from armed conflicts and climate change. The region requires more investment to boost economic growth.
Segment 3: South African Markets
The Competition Commission has given the Government Employees Pension Fund (GEPF) an approval to acquire Lanseria Holdings, which controls Lanseria International Airport (which is situated north west of Johannesburg). The Public Investment Corporation (PIC) is representing the GEPF.
Lender Standard Bank has signed a deal with Saudi Export-Import Bank worth R440 million (US$25 million) to facilitate trade between Saudi Arabia and Africa's most industrialized country.
Insurance conglomerate Discovery's banking division has delivered exceptional results with regards to its new home loan product which was launched in May. The Bank aims to disburse R766 million (US$43.5 million) to home loan clients by the end of 2024.
Clothing retailer Woolworths' latest financial results for the 53 weeks through June 2024 showed that the company recorded a poor performance in Australia, i.e.:
Property developer Calgro M3 reported its interim results for the six months ended 31 August 2024, i.e.:
Segment 4: JSE Lunch-Time Market Update