The Trader's Update, 20-21 October 2022
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 higher after the resignation of the U.K.'s prime minister just 44 days after she took office, i.e.:
The pan-European Stoxx 600 closed 0.25% higher with tech stocks leading gains with a 2% rise with oil and gas stocks were up by 1.45%.
Dutch firm Be Semiconductor led the stock gains as it rose by 15% despite warnings of a downturn in the industry. Ericsson and Nokia slipped by 14% and 7% respectively after both missed analysts' estimates.
On the data front, the U.K.'s consumer price index rose to 10.1% for the month of September according to data posted by the Office for National Statistics.
It is expected that the Bank of England's emergency bond-buying programme could take up to 10 years to unwind and it confirmed in a statement that it would begin selling asset under its ?838 billion asset purchase facility on 1 November.
The Pound Sterling rose by 0.5% against the U.S. Dollar as the U.K.'s prime minister resigned.
Asia-Pacific Markets
Hong Kong
Listed stocks of some Chinese airlines spiked on reports that Chinese officials are debating reducing the quarantine period for inbound travellers. China Southern Airlines was up 3% and Air China was up by around 2%. Tech stocks plunged with tech heavyweight Alibaba being down by around 6% and Tencent lost around 4%. The Hang Seng lost around 1.4% to close at 16,280.22.
China
The People's Bank of China kept the one-year loan prime rate at 3.65% and the five-year rate at 4.30%.
The offshore yuan touched a record low of 7.27 yuan against the U.S. Dollar.
Mainland Chinese markets closed lower, i.e.:
Japan
Japan's trade deficit for September reported a trade deficit of 2.09 trillion yen and thus missed Reuters poll and the trade deficit for the first half of the 2022-2023 fiscal year is the largest on record.
Japanese 10-year government debt yields breached the 0.25% ceiling that the Bank of Japan vowed to protect.
Markets closed lower, i.e.:
South Korea
The top messenger app Kakao's share price shed over 2% on Wednesday after a fire at a data centre led to a mass outage over the weekend and disrupted services for its messengers worldwide.
Markets closed lower, i.e.:
Australia
The unemployment rate for September remained unchanged at 3.5% according to the Australian Bureau of Statistics. The S&P/ASX 200 closed 1.02% lower at 6,730.70.
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U.S. Markets
Equity markets closed lower as another U.S. Fed official suggested another interest rate hike might be on the cards, i.e.:
On the corporate earnings front, IBM, Freeport-McMoran and Las Vegas Sands released better-than-expected earnings.
Tesla shares dropped by 6% after it missed revenue estimates and comments that the demand for its electric vehicles reduced due to macroeconomic factors. Insurance provider Allstate was the worst performing stock in the S&P 500 after it warned that it would have a quarterly loss. Railroad company Union Pacific fell as it lowered its guidance for volume for the rest of the year.
The yield on the 10-year Treasury Note rose by 10 bps to 4.23%.
The National Association of Realtors was expected to release the existing home sales data for September and expectations were that around 4.7 millions home were sold, down from 4.8 million recorded in the last month.
Segment 2, African Markets Segment
Namibia
The government of the country has agreed on a provisional deal to sell its rare metals to the European Union which are critical to the renewable energy sectors, mines and energy minister.
Rwanda
The country is positioning itself to become a manufacturing hub with investments across key sectors of its economy and thus is set to become self-sufficient.
Uganda
Uganda's national oil company (UNOC) expects to secure around US$5 billion in funding for a crude pipeline that the European Union (EU) is opposed to. In February 2022, TotalEnergies TTEF, PA and its partner China National Offshore Oil Corporation signed a final investment decision with Uganda and China.
Kenya
The top commercial banks in the country have started increasing lending rates by up to 1.1% after the Central Bank of Kenya raised its benchmark interest rate by the biggest margin in more than seven years.
Millers have scaled down purchasing purchasing maize amid a cash crisis in the wake of Sh4 billion that the government owes them.
Nigeria
Nigeria's telecommunications regulator has ordered telecommunication companies, including MTN Nigeria, to reverse the 10% tariff hikes imposed that were meant to cover rising costs.
Segment 3, South African Markets Segment
South Africa's economy is likely in a technical recession as intensified power outages and the geopolitical tension in eastern Europe caused turmoil in global financial markets. It is likely that the economy contracted in the third quarter of 2022, following a 0.7% contraction in the second quarter.
South Africa's inflation eased for the second straight month, from 7.6% in August to 7.5% in September according to the latest data released by Statistics South Africa. The CPI figure is still outside the 3%-6% inflation target band and thus may incentivise the South African Reserve Bank to delay holding back from its aggressive monetary policy stance.
Due to the Transnet strike, Sasol was forced to scale back on some of its operations at its Secunda and Sasolburg plants.
Clicks Group has reported a healthy increase in earnings with turnover for the year ended August 2022 grew by 6% to R39.6 billion. Headline earnings per share from continuing operations grew by 30.1% to R10.33. The company declared a dividend of R6.37 per share, up by 30% from last year.
Segment 4, JSE Morning Update: