The Trader's Update, 22 August 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 lower as markets feared that central banks may be more aggressive in hiking interest rates, i.e.:
The pan-European Stoxx 600 closed 1% down with autos stocks falling 3.9% to lead the losses.
Risk sentiment in the Euro markets dampened after minutes from the European Central Bank suggested that the central bank might be more hawkish in its latest monetary policy committee meeting as the latest Eurozone PMI data is expected to be released on Tuesday.
In terms of individual share movements, Danish pharmaceutical company Novo Nordisk's share price rose by 5% and was the best performer in the Stoxx 600 as it announced positive results from a phase two trial of its drug CagriSema in people with type two diabetes. Dutch online food delivery app was the worst performing stock in the Stoxx 600 dropping 9% after investors sold off their holdings and cashed in about €1.8 billion of the sale of a one-third stake in the company.
German utility company Uniper's share price fell by more than 10% after warnings of further cuts in the supply of Russian gas to Europe which have already compelled the company to seek a bailout. German health care group Fresenius was also the top performer in the Stoxx 600 after the appointment of a new CEO with its share price rising by above 5%.
The Euro had slipped below parity against the US Dollar and by 9.15 a.m. London Time the currency was trading at exactly US$1.
Asia-Pacific Markets
Markets in the region closed mixed with China's central bank cutting rates.
The People's Bank of China cut its one-year benchmark lending rate by 5bps to 3.65% and its five-year rate by 15bps to 4.3%. The bank aims to support the sluggish credit mortgage market. Broader markets closed higher, i.e.:
Hong Kong's Hang Seng declined by 0.6% in its final hour of trading to close at 19,656.98.
Japanese markets closed lower, i.e.:
South Korean markets closed relatively lower, i.e.:
Australia's cement maker Adbri's share price plunged by 16% after it posted a 15% decline in its net profit for the six months ending 31 June compared with the same period last year. The S&P/ASX 200 closed 0.95% lower at 7,046.90.
The Reserve Bank of New Zealand's policymakers are aiming to make policy rates to be comfortably neutral in their pursuit to curb the high inflationary environment. The Bank raised the repo rate by 50bps to 3% last week.
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U.S. Markets
Equity markets in the region plunged to a two-month low after renewed fears that the U.S. Fed might hike interest rates by 75bps at its Federal Open Monetary Committee meeting in September, i.e.:
The equity sell-off was broad-based with all stocks in the Dow losing ground and tech stocks were the worst hit. Intel and Salesforce stocks fell by 4% and 3% respectively with FAAMG stocks losing ground by 2%. Streaming services stocks like Warner Bros. dropped with Netflix being among the worst performers in the S&P 500.
AMC Entertainment Holdings' share price plunged by 42% as its new "APE" preferred equity shares began trading on the New York Stock Exchange and a rival operator considering bankruptcy. Shares of another meme stock Bed Bath & Beyond dropped after activist investor Ryan Cohen's sale of his stake in the company was successful. Ford's share price dropped after the automaker cut jobs and was ordered to pay a fine of US$1.7 billion following a deadly truck crash in Georgia state.
Fertiliser makers, Mosiac and CF Industries were the winners in the S&P 500 defying the bearish market sentiment by trading 2% higher.
Oil futures traded flat after Saudi Arabia's oil minister said that OPEC+ may cut production to meet market challenge and natural gas prices soared as Russia announced an unplanned maintenance shutdown of Nord Stream 1 pipeline next week.
The yield on the 10-year Treasury Note rose to 3.04%.
Segment 2, African Markets Segment
Tanzania has invited bids for the construction of a 367km Uvinza-Gitega railway line that will extend the Standard Gauge Railway to Burundi.
Nigeria's National Bureau of Statistics is set to release the country's second quarter GDP figures this week. The country's House of Representatives said that it plans to meet with Emirates Airline after the airline said that it will suspending flights to the country from September as it struggles to expedite its profits as the country experiences a foreign currency shortage.
Australian-listed Invictus Energy Ltd. expects to start its first drilling activity in exploration for oil and gas in Zimbabwe in the next coming weeks with first well expected to cost the company US$16 million.
Segment 3, South African Markets Segment
Telkom's stock price jumped by 5% on Monday morning after the telecommunications company confirmed that is in talks with MTN over a possible takeover bid.
Chinese, United Arab Emirates and European companies have been shortlisted for the Durban port upgrade tender which is valued at R100 billion. Local players like Grindrod and Remgro have been shortlisted as well.
Standard Bank posted half-year earnings of R15.3 billion on Friday with a 33% jump in its headline earnings per share. The growth is attributed to a larger client base, increased transactional activity and growth in the bank's lending book which saw the bank's non-interest revenue grow by 13% and net interest income grow by 14%.
Sasol has warned that carbon taxes pose a threat to its business and the company may be forced to scale back some of its operations as the government aims to meet net-zero emissions goals by 2050.
Segment 4, JSE Morning Update (17/08/2022)