Daily Market Overview 13 October 2021

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Local Market Update

– Stocks ignored local data yesterday, taking their cue from global markets as stagflation risks hit some stock markets. The Johannesburg All-Share index weakened 0.17% while the Top-40 index fell 0.27%. Earlier on Tuesday, data showed August manufacturing output rose 1.8% year on year while mining production grew 2.0% in annual terms the same month. Manufacturing surprised to the upside while mining came in weaker than expected, reinforcing the view that the economic recovery from the COVID-19 pandemic has been uneven across sectors.

– The rand gained against the dollar on Tuesday, as analysts said markets were pricing in an interest rate increase by the central bank in November. At the close, the rand was trading around R14.97 to the dollar, 0.63% firmer. The South African Reserve Bank (SARB) has kept rates on hold at its previous seven monetary policy meetings, but at its Monetary Policy Review last week it highlighted inflation risks.

– Gold steadied this morning as investors awaited U.S. inflation data and minutes from the Federal Reserve’s last policy meeting for clues as to when the central bank would start withdrawing its pandemic stimulus. Oil prices dropped earlier today, after a mixed finish in the previous session, amid worries that soaring coal and natural gas prices in China, India and Europe will stoke inflation and slow global growth, reducing oil demand.

In Local news

M&R expands in US market with R423m deal
Engineering and construction group Murray & Roberts (M&R) has acquired private, fourth-generation multi-trade engineering and contracting business JJ White Incorporated in the United States for a maximum of $28.25 million (around R423 million). The acquisition was made through M&R’s subsidiary Clough, the brand name for M&R’s energy, resources and infrastructure platform (ERI). M&R said on Tuesday the transaction is being undertaken as part of the group’s strategy to diversify and expand the service offering of its ERI business platform in North America.

Cabinet says final decision on e-tolls has not been made
A final decision on the future of e-tolls on the Gauteng Freeway Improvement Project (GFIP) has not been taken by the government. This is despite reported comments by Transport Minister Fikile Mbalula late last week that the e-toll system cannot be scrapped. Mbalula’s comments have caused some confusion, with some people interpreting his comments as being the government’s long-awaited final decision on the future of the controversial scheme. However, cabinet spokesperson Phumla Williams told Moneyweb on Tuesday that a final decision on the future of e- tolls on GFIP has definitely not been made yet.

International Market Update

– European stocks closed mostly lower on Tuesday amid volatile sentiment in global markets. The pan-European Stoxx 600 closed 0.1% lower provisionally, paring losses slightly after falling as much as 1.2% in early deals. Health care, retail and basic resources stocks fell 0.5% each, leading the losses. The muddled trade in Europe on Tuesday comes amid a choppy period for global markets, as investors monitor the outlook for inflation, supply chain issues, bond yields and central bank policy.

– The three major U.S. stock indexes closed lower for a third consecutive session Tuesday ahead of a key inflation reading and a kick-off to third-quarter earnings season. The averages traded near the flatline for much of Tuesday’s session before selling picked up into the close. Markets were “mostly in wait-and-see mode” ahead of report releases this week, Bank of America said. The consumer price index for September is slated to be announced Wednesday morning. Economists expect prices for an array of consumer goods to jump 0.3% in September from the month prior and 5.3% year over year, according to Dow Jones.

– Asian shares were on edge this morning as worries about soaring power prices fuelling inflation weighed on sentiment and drove expectations the United States would taper its emergency bond buying programme, holding the dollar at a one-year high. Also contributing to the uneasy mood, investors are waiting for a raft of data releases due to be published today, including Chinese trade figures, U.S. consumer price inflation data, and minutes of the U.S. Federal Reserve’s September policy meeting. Hong Kong’s stock market was closed in the morning because of a typhoon

In International news

Boeing aircraft orders outpace cancellations for eighth consecutive month
Boeing on Tuesday reported net aircraft sales for the eighth consecutive month, but deliveries of its Dreamliner planes remain suspended as they undergo quality checks. The aircraft manufacturer posted sales of 27 aircraft, including 16 737 Max planes and six 777 freighters in September as well as cancellations of five planes. Boeing said it delivered 35 jets last month. Those included 26 737 Maxes. Net orders for the year through September are 349. Boeing aircraft orders outpace cancellations for eighth consecutive month

LG to pay up to $1.9 billion to General Motors over Bolt EV battery fires
LG Electronics has agreed to reimburse General Motors up to $1.9 billion to recall and fix Chevrolet Bolt electric vehicles due to fire risks caused by faulty batteries provided by the South Korean supplier. Problems with the Bolt – the company’s flagship mainstream EV – have led the automaker to recall every one of the electric cars since production began in 2016. Fixing the vehicles, including completely replacing some batteries entirely, is expected to cost $2 billion, GM said Tuesday. That’s up from a previous estimate of $1.8 billion