Daily Market Overview 12 October 2021

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Local Market Update

– Stocks listed in Johannesburg gained on Monday in a broad-based rally largely led by the mining sector where both diversified and precious metals miners rose. The local stock exchange mirrored a global optimism led by gains in China and higher crude oil prices. The benchmark all-share index was up 1.32% to 66,101 points while the blue-chip index of top 40 companies was up 1.4% to 59,663 points.

– The rand weakened against a stronger dollar on Monday as investors remained confident the U.S. Federal Reserve would start tapering its stimulus measures this year and as a local business confidence indicator dipped. At the close of the session, the rand was trading around R14.93 to the dollar, or 0.28% softer. A South African business confidence index fell to 91.0 in September from 91.9 in August, as retail sales and manufacturing output declined. Domestic focus will turn to August mining and manufacturing numbers due today, and retail sales on Wednesday.

– Gold traded flat in early trade today as the dollar held firm on expectations that the Federal Reserve will announce a tapering of its bond purchases next month. Oil prices fell for the first time in four days this morning, taking a breather after weeks of gains fuelled by a rebound in global demand that is contributing to energy shortages in economies from Europe to Asia.

In Local news

Telkom says Netflix no longer available on SA provider
Telkom said Netflix will no longer be available on the South African phone and internet company’s set-top box from October. A deal between the parties has come to an end and will not be renewed, Content Executive Wanda Mkhize said in a statement, without giving a specific reason. Other content partnerships will be announced in due course, she said. The move comes after MultiChoice, Africa’s largest pay-TV provider, signed deals with Netflix and Amazon.com to offer their streaming services through its new decoder.

Inside Massmart’s e-commerce growth drive
With an explosion in online sales expected in South Africa in the coming years, e-commerce is becoming core to the growth strategy of Walmart-owned Massmart. The group, which owns brands such as Builders, Makro and Game, has launched mobile shopping “mini apps” in partner Vodacom Group’s new VodaPay “super app”, which was “hard-launched” in South Africa on Sunday with an aggressive advertising campaign in consumer media. But this is just of the start of much bigger ambitions for Massmart, Sylvester John, its head of e-commerce, said in an interview with TechCentral on Friday. He said online retail is becoming a much more important component of Massmart’s strategy, especially given the group’s expectations that e-commerce in South Africa will roughly triple in size as a proportion over overall sales.

International Market Update

– European stocks were muted on Monday, searching for direction after a volatile week. The panEuropean Stoxx 600 hovered around the flatline and finished flat, with travel and leisure stocks shedding 1% while basic resources gained 3%. Three European Central Bank policymakers on Friday discussed the possibility of exiting pandemic-era monetary and fiscal support measures even if it makes some governments unhappy, according to reports from a panel discussion in Slovakia. The ECB is expected to make a decision on its extraordinary stimulus measures in December.

– U.S. stocks fell to start the week Monday as investors weighed surging oil prices, economic worries and major third-quarter earnings results ahead. Stocks churned for most of the day, but selling increased in the final hour, with the major averages closing the session at their lows. Energy stocks gained for most of the session as oil prices jumped, but also rolled over with the broader market into the close. Meanwhile, Goldman on Monday cut its U.S. economic growth forecast. The firm lowered its 2022 growth estimate to 4% from 4.4% and took its 2021 estimate down a tick to 5.6% from 5.7%.

– Asian shares dropped this morning, as a global energy crunch fuelled inflation fears, clouding investor sentiment before the U.S. corporate earnings season. Also weighing on investor sentiment, Reuters reported that some of China Evergrande Group’s offshore bondholders have not received an interest payment by the Monday deadline.

In International news

Venture capitalists are chasing industrial tech start-ups as supply shocks widen
Supply chain disruptions are hitting some of the most powerful companies in the world, pushing venture capitalists to invest in industrial tech start-ups that are offering solutions. So far this year, a record $45.1 billion has been raised by industrial start-ups, compared with the $34 billion raised in all of 2020, according to data from PitchBook. But the recent surge in supply chain bottlenecks, logistical issues and factory shutdowns during the Covid pandemic has pushed Lux Capital, GGV Capital and General Catalyst, among other reputable VCs, to invest in cutting-edge start-ups that specialize in predictive technology, software and artificial intelligence.

Texas Gov. Abbott issues order banning Covid vaccination mandates
Texas Gov. Greg Abbott issued an executive order on Monday prohibiting any entity, including private businesses, from imposing Covid-19 vaccination requirements on employees or customers. “The COVID-19 vaccine is safe, effective, and our best defense against the virus, but should remain voluntary and never forced,” said Abbott said in a statement. Abbott, a Republican, said in his order that it was prompted by the Biden administration’s vaccine federal mandate, which the governor called federal overreach. President Joe Biden announced a mandate last month requiring companies with 100 or more employees to ensure that their workforces are vaccinated or regularly tested.