The Traders' Update, 20-21 August 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 closed lower as economic outlook uncertainty persisted, i.e.:
The pan-European Stoxx 600 closed 0.46% lower with oil and gas stocks falling by 2.09% to lead the losses.
On the individual shares front, British telecommunications company BT shares cratered after its rival network provider, CityFibre, reported that it had gained a deal to launch Sky broadband services on its network.
Sweden's Riksbank lowered its benchmark lending rate by 0.25% to 3.5% and it signaled that there may be two or more rate cuts to implemented later.
Asia-Pacific Markets
Hong Kong
Real estate firm Kaisa shares dropped slightly after surging following a report that the company reached a debt restructuring agreement with its creditors. The restructuring process consists of an issue of HK$38.95 billion (US$5 billion) in senior notes and HK$37.39 billion in convertible bonds.
The Hang Seng closed 0.33% lower at 17,511.08.
China
The People's Bank of China kept both the one-year and five-year loan prime rates (LPRs) unchanged at 3.35% and 3.85% respectively, in line with market expectations. The one-year LPR is a benchmark for most corporate loans and the five-year LPR is a benchmark for mortgage bonds.
Mainland markets closed lower, i.e.:
Japan
Broader markets closed higher, i.e.:
South Korea
Consumer sentiment in August dipped by 2.8 index points from a two-year high of 103.6 recorded in July, due to uncertainty relating to a prospective U.S. economic recession and the subsequent stock market retreat.
Korean markets closed higher, i.e.:
Singapore
The Straits Times Index closed 0.44% higher at 3,370.31.
Australia
The Reserve Bank of Australia's latest minutes revealed that board members had considered a rate hike but the flow of the observed data at that point in time was not significantly different to the one observed in the previous meeting, hence the benchmark lending rate was left unchanged. However, the Governor noted that the likelihood of a rate cut in the short-term remained relatively low.
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The S&P/ASX 200 closed 0.22% higher at 7,997.70.
U.S. Markets
Equity markets closed lower on Tuesday, i.e.:
Insulin pump manufacturer Insulet shares plunged to the bottom of the S&P 500 alongside DexCom (manufacturer of continuous glucose monitors) shares after a report showed that a blockbuster drug from drugmaker Eli Lilly significantly reduced the risk of patients developing Type 2 diabetes.
Oil and gas stocks like Valero Energy and Marathon Petroleum fell as crude oil futures prices decreased on the back of hopes for easing tension in the Middle East and a sluggish economic growth in the Chinese market.
Aircraft manufacturer Boeing shares cratered after the company announced the grounding of its 777X test fleet after an inspection showed the failure of a key engine mounting structure. The setback is counted amongst a series of safety and production-related issues that have plagued the company as of late.
Cybersecurity company Palo Alto Networks shares surged to the top of the S&P 500 after the company reported better-than-expected sales and profit results for its fiscal fourth quarter. Analysts boosted their price target on the stock citing success over the company's ongoing "platformization" efforts and the early success of its artificial intelligence (AI) integration initiatives.
Operator of restaurant chains Darden Restaurants shares rose after independent investment bank Raymond James reaffirmed its "outperform" rating on the stock. The company announced that it plans to open between 45 to 50 new restaurants in this fiscal year.
Payment provider PayPal Holdings shares also rose after JPMorgan analysts reiterated their "overweight" rating on the stock and hence lifted their price target to US$80. The company also announced that it is expanding its partnership with global financial tech platform Ayden to speed up guest checkout processes.
Segment 2: African Markets
Nigeria
The government reported that it is on track to achieve its ?19.4 trillion (US$12.5 billion) tax revenue target as it is pushing for legislative overhaul in an attempt to modernise tax collection. This also includes regulating cryptocurrencies.
Ghana
The government has begun construction of a 186.96 billion Ghana cedi (US$12 billion) oil refinery which is expected to produce 300,000 barrels of oil per day. The country is currently the world's second largest cocoa producer and now it aims to become a petroleum hub in the west African region.
Segment 3: South African Markets
Petrochemicals company Sasol reported its full-year results for the year through June 2024:
Asset manager Coronation will pay its shareholders a special dividend of R1.53 per share to share some of its court wins from the battle it had with the South African Revenue Services (SARS).
Middle East airline operator Qatar Airways has acquired a 25% stake in South African airline operator, Airlink, to expand its presence on the African continent. With the capital injection, Airlink plans to increase its capacity and hence expand its marketing reach.
British multinational bank HSBC is considering selling off its South African business as it looks to focus on Asian markets and the local branches and securities unit have drawn attention from bidders located in China and the United Arab Emirates.
According to FNB economists, the country's automotive industry is in trouble due to weakening demand arising from a rising cost-of-living and energy constraints. The sector contributes an estimated 5.3% to national GDP output and supports approximately over 400,000 jobs.
Segment 4: JSE Lunch-time?Market Update