The Traders' Update, 27-28 November 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 higher in afternoon market trades, i.e.:
On the individual shares front, French spirits group Remy Cointreau shares rose in early morning trades after the company reported a smaller-than-expected drop of 12.9% in its first-half operating profit to €147.3 million (US$155.3 million).
British insurance firm Direct Line shares surged in early morning deals after the company noted that the takeover bid from British rival Aviva significantly undervalued the company.
British waste management firm Renewi shares jumped to an all-time high after it announced that it had reached a preliminary agreement to be acquired by Australian asset manager Macquarie Asset Management.
British grocery firms Tesco and Sainsburys shares also rose in early morning deals after U.S. investment bank J.P. Morgan upgraded both stocks to "overweight" from "underweight".
On the data front, Destatis reported that German headline consumer inflation in November remained unchanged at 2.4% year-on-year.
The Spanish Statistical Office reported that Spanish headline consumer inflation in November rose to 2.4% year-on-year, in line with market expectations, and higher than the 1.8% reported in the previous period.
The U.K.'s British Retail Consortium reported that U.K. consumer sentiment in October remained weak even after the Labour government landmark first budget was passed.
Asia-Pacific Market
Hong Kong
The Hang Seng was trading 1.27% lower at 19,354.14 in its final hour of trading.
China
Mainland markets fell in afternoon trades, i.e.:
Japan
Broader markets closed higher, i.e.:
South Korea
Government trade data is expected to show exports slowed for a fourth straight month and to be at their weakest level in 14 months. Exports are expected to have risen by 2.8% year-on-year in November, down from the 4.6% reported in the previous month.
The Bank of Korea unexpectedly cut its benchmark lending rate by 25bps to 3% as the country seeks to boost its economic growth prospects. The rate cut follows a lower-than-expected third-quarter GDP figure of an expansion of 1.5% compared to the 2% growth expected by polled economists.
Markets closed higher, i.e.:
Singapore
The Straits Times Index was trading 0.44% higher at 3,723.78 in its final hour of trading.
Australia
The S&P/ASX 200 closed 0.45% higher at 8,444.30.
U.S. Markets
Equity markets closed lower as investors digested the latest Personal Consumption Expenditure (PCE) data, i.e.:
PC manufacturer Dell Technologies shares plunged to the bottom of the S&P 500 after the company's quarterly report showed that profit estimates were edged out, however, they missed sales. Even though artificial intelligence (AI) demand boosted the company's networking and server revenue, the COO said that earnings from the AI business are likely to be non-linear as customers slowly adapt to the shifting technology landscape.
PC maker Hewlett Packard (HP) shares fell after the company's fiscal fourth quarter profit was in line with market expectations, but fiscal fourth quarter sales were below market expectations. Furthermore, the current quarter profit guidance also came in lower than expected. AI PC sales accounted for 17% of the full-year sales, suggesting that the adoption of AI technology by customers was muted.
Design, engineering and construction software provider Autodesk shares fell after the company announced a transition in its CFO role after the firm's accounting practices were scrutinized in May. However, the company's quarterly sales and profit results were better than expected.
Real estate operating company Texas Pacific Land Corp. shares rose to the top of the S&P 500 after the company has found numerous profitable uses for its acreage in the Permian Basin (which is regarded to be the highest-producing oil region in the U.S.). In addition to providing water and wastewater services for fracking operations, the company has found new opportunities with bitcoin miners and wind farms amongst others.
Cosmetics retailer Ulta Beauty shares rose after investment bank DA Davidson reported that it expects competitive pressures to ease even though the company is currently navigating through tough trends.
Internet infrastructure firm VeriSign shares rose after the company announced that it renewed its deal with the Internet Corporation for Assigned Names and Numbers (ICANN), which is a non-profit organisation that coordinates the domain name system (DNS) and IP addresses on the web. Citi analysts noted that the updated agreement did not include changes to the provisions that regulate VeriSign charges for its domain names. The company has yet to renew its agreement with the Department of Commerce.
On the data front, the Bureau of Economic Analysis reported that the Personal Consumption Expenditure (PCE) in October rose by 2.3% year-on-year, higher than the 2.1% reported in the previous month. The Federal Reserve closely monitors the PCE to determine the influence on its future monetary policy decisions.
Segment 2: African Markets
Uganda
Offshore hackers were able to steal 62 billion Ugandan shillings (US$16.8 million) from the Bank of Uganda.
Ethiopia
The International Monetary Fund (IMF) has reached a staff-level agreement with the Ethiopian government under the second review of the country's 428.51 billion Ethiopian birr (US$3.4 billion) financing agreement. The government will have immediate access to 31.63 billion Ethiopian birr.
Mozambique
The Bank of Mozambique cut its benchmark lending rate by 75bps to 12.75% and this is the sixth consecutive rate cut as inflation remains within controllable bounds.
Segment 3: South African Markets
The Electricity Ministry is in talks with the Qatari government to potentially source liquified natural gas from the country as South Africa's current supplier Mozambique reported that its reserves were predicted to stop producing and supplying gas by 2026.
State air carrier South African Airways reported a profit of R252 million (US$13.89 million) for the first time since 2012 due to the airline's improved financial position and future plans. Some South African lenders have been approaching the company to provide possible financing to finance its growth strategy for the next five years.
Discount retailer Boxer Superstars commenced trading on the Johannesburg Stock Exchange (JSE) on Thursday with the initial public offering (IPO) concluding the sale of 157.4 million shares being sold at R54 per share and hence its parent company, Pick 'n Pay, raised R8.5 billion (US$470 million). The company is currently the leading discount retailer in South Africa with an annual turnover of R37.4 billion and a trading profit of R2.1 billion.
U.S. investment bank Goldman Sachs believes that South Africa's consumer price inflation will average 3.3% in the next year, with Bloomberg economists having a median estimate of 4.2%. The lower inflation prospects will boost the likelihood of the South African Reserve Bank (SARB) implementing more interest rate cuts in the next year.
Credit ratings agency S&P Global Ratings raised state utility Eskom's credit rating on dollar bonds to a positive outlook which in turn reduced the premium paid by the utility to investors holding the bond relative to dollar-issued bonds by the South African government.
Lender African Bank released its financial results for the year through September 2024, i.e.:
Wholesale retailer SPAR released its financial results for the year through September 2024, i.e.:
Segment 4: JSE Afternoon Market Update