Daily Market Overview 1 September 2021

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Local Market Update

– Johannesburg-listed stocks ended the month firmer, with the Johannesburg All-Share index up 0.54%, while the Top-40 index jumped 0.48%, supported by mostly stronger earnings reports. Among the companies reporting strong results, Old Mutual jumped 5.42% after the insurer swung back to a first-half basic profit and revised its 2023 targets upwards. Automotive group Motus Holdings closed 2.93% firmer after its annual operating profit climbed 78%.

– The rand strengthened on Tuesday as the dollar remained pressured by the U.S. Federal Reserve’s dovish stance and looked to U.S. jobs data later in the week for clues on the U.S. labour market. The greenback hit its lowest level in more than three-weeks against a basket of currencies after Federal Reserve Chair Jerome Powell said tapering could begin this year but that the central bank was in no hurry to raise interest rates. That boosted market sentiment in the developing world and the risk-sensitive rand has rallied since. At the close, the rand was trading around R14.53 to the dollar, 0.85% firmer.

– Gold prices held steady this morning as investors awaited a key U.S. jobs report for clues on when the Federal Reserve might start reducing its pandemic-era stimulus measures. Oil prices were stable today ahead of an OPEC+ meeting, at which major producers will decide whether to go ahead with their plan to add supply while COVID-19 cases soar in Asia and U.S. refiners assess flood damage in the wake of Hurricane Ida.

In Local news

– AdvTech benefits from declining trust in public sector education
Interim results for the six months to June 2021 released on Tuesday (August 31) explain the renewed enthusiasm for AdvTech shares. The group is primarily focused on education and recruitment. SA recruitment has been withering on the vine for years due to a weak economy and the flight of skills abroad, so it says something about AdvTech management that it was able to pull a few rabbits out of the hat and return its SA division to profitability.

– Old Mutual raises 2023 targets on return to half-year profit
Old Mutual swung back to a first-half basic profit on Tuesday and revised its 2023 targets upwards, even as it warned of uncertainty around the future impacts of the pandemic. The insurer benefited from higher sales of more profitable new business and a recovery in local and global equity markets, though mortality claims from COVID-19 were worse than it had anticipated. Its basic earnings per share stood at 67.8 cents in the year to June 30, compared to a basic loss per share of 128.5 cents a year earlier and in the middle of its forecast range.

International Market Update

– European stocks closed lower on Tuesday, as investors digested the latest economic data from the region and beyond. The pan-European Stoxx 600 index closed down 0.5% provisionally. However, the index was up over 1% month-on-month, marking its seventh consecutive month of gains. That’s despite August typically being a quieter month for trading given the summer vacation period. Markets turned lower yesterday following the release of euro zone inflation data for August which showed consumer prices increased by 3% this month from a year ago, according to preliminary estimates, far above expectations and the European Central Bank’s 2% target.

– Stocks edged lower on Tuesday as the S&P 500 wrapped up its seventh-straight month of gains at just below all-time highs. Zoom shares fell about 16% on Tuesday after the video-conferencing software company showed slowing revenue growth in the second quarter, weighing on the Nasdaq.

– Shares in Asia-Pacific were mixed in early morning trade today, as a private survey showed shrinking Chinese factory activity in August. Australian stocks also fell as the S&P/ASX 200 slipped 0.6%. Australia’s gross domestic product rose 0.7% in the June quarter, according to data released by the country’s statistics bureau.

In International news

– Microsoft’s first major operating system in 6 years, Windows 11, launches Oct. 5
Microsoft said Tuesday it will start offering free upgrades to Windows 11, the next version of its desktop operating system, to eligible PCs on Oct. 5. Windows, originally released in 1985, remains a key piece of Microsoft’s business. In its fiscal fourth quarter, Windows delivered $6.6 billion in revenue, representing 14% of the software and hardware company’s total sales. A successful release of Windows 11 could further secure the franchise’s future, which can also benefit other parts of Microsoft’s business, such as Azure and Office.

– South Korea passes bill limiting Apple and Google control
South Korea’s parliament has approved a bill that will make it the first country to impose curbs on Google and Apple’s payment policies that force developers to only use the tech giants’ proprietary billing systems. The legislation will become law once signed by President Moon Jae-in, whose party has been a vocal supporter of the bill. Apple and Google’s policies usually require developers to pay the tech giants a commission as high as 30% of every transaction.