Daily Market Overview 1 October 2021

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Local Market Update

– Johannesburg-listed stocks dipped, closing the day with the biggest monthly decline since the March 2020 crash as worries around China’s growth and crackdown on technology firms, coupled with stimulus withdrawal signals from the U.S. dented sentiment. The benchmark all-share index dropped 0.13% to 64,282 points, closing the third quarter of the year with a monthly decline of 4.96%. The blue-chip index of top 40 companies was down 0.27% to 57,863 points. South African mining firms and technology investor Naspers, which indirectly holds around 30% stake in Chinese company Tencent, are among the major companies that pulled the indexes down this month.

– The rand gained strongly on Thursday as the country’s trade surplus widened more than expected last month, credit extension picked up and the dollar fell on global markets. At the close of the session, the rand was trading around R15.06 to the dollar, or 0.78% firmer. Data from the revenue service showed the trade surplus widened to 42.4 billion rand ($2.8 billion) in August, versus economists’ predictions for a R39.0 billion surplus.

– Gold prices eased this morning after rallying to a one-week high above the key $1,750 level in the previous session, as the dollar rebounded and made the metal expensive for holders of other currencies. Oil prices dropped earlier today on the prospect that the OPEC+ supplier alliance might step up a planned increase in output to ease supply concerns, with soaring gas prices spurring
power producers to switch from gas to oil.

In Local news

Capitec results show recovery – and continued growth
Capitec posted strong results for the six months to August 2021. All the measurements applicable to a bank showed a remarkable recovery from a year ago, while shareholders should be very happy that the numbers they care about were recovering even faster. CEO Gerrie Fourie actually let slip in an online presentation of the results that client growth and the acceptance of the Capitec brand is “scary”. Headline earnings per share increased by 513% to R34.47 and basic earnings per share by the same percentage.

Bidcorp beats hospitality blues
Bidcorp’s results for the year to June 2021 released on Thursday showed a strong recovery from the havoc of the previous year when travel restrictions and the closure of restaurants worldwide impacted heavily on its operations and the ability to earn revenue. Headline earnings per share (Heps) increased by some 22% to nearly R8.70 and free cash flow improved from R2.7 billion to R4.7 billion. However, the group is still far from the numbers it produced before the Covid-19 pandemic hit. Bidcorp, supplying a large range of food to restaurants, airlines, hospitals, hotels and whoever renders catering services in 35 different countries, was hit hard by lockdowns and operating restrictions worldwide during 2020.

International Market Update

– European stocks closed slightly higher on Thursday but still wrapped up the month in negative territory. The pan-European Stoxx 600 provisionally closed up 0.2%, paring some of its earlier gains. The index is down 3.2% since the start of the month, ending a seven-month winning streak. Germany’s blue-chip DAX fell 3.6% for the month, marking its first negative month since January 2021 and its worst month since October last year. The DAX also posted its first negative quarter since the first quarter of 2020. It comes as traders have been tracking the results of Germany’s election, which will see long-time leader Angela Merkel step down after 16 years.

– U.S. stocks pulled back on Thursday as Wall Street wrapped up its worst month of the year on a sour note. The weakness for the market came on the final day of what has been a rough month for equities, as rising rates, inflation fears and concerns about the Chinese property market have roiled stocks.

– Shares in Asia-Pacific slipped in early morning trade following an overnight drop on Wall Street. Sentiment at Japan’s large manufacturers improved in the three months to September, according to the Bank of Japan’s quarterly tankan business sentiment survey released Friday.

In International news

Zoom and Five9 abandon $14.7 billion acquisition
Zoom’s agreement to buy cloud contact center software company Five9 was scuttled on Thursday,
after Five9 shareholders rejected the deal. Zoom said in July that it was acquiring Five9 in an all-stock purchase for $14.7 billion, its first billion-dollar-plus purchase and, at the time, the second biggest tech deal of the year. The company has now lost an opportunity to quickly broaden its capabilities after its stock rallied during the coronavirus pandemic.

Facebook grilled by Senate over company’s impact on kids
A Facebook executive was grilled by Senators on Thursday about the impact its apps have on younger users, two weeks after an explosive report indicated the company was aware that Facebook-owned Instagram could have a “toxic” effect on teen girls. The hearing, featuring
Facebook’s global head of safety, Antigone Davis, is the first of two that the Senate Commerce Committee is holding on how Facebook approaches its younger users.