Daily Market Overview 18 October 2021

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Local Market Update

– The Johannesburg Stock Exchange’s Top 40 index closed 0.17% higher at 60,494 points and the broader All-Share index was up 0.27% at 67,029 points. Drugmaker Aspen Pharmacare and pharmacist Clicks led the blue-chip index, rising 3.6% and 3.4% respectively. On Friday, South African Health Minister Joe Phaahla announced that the country would start vaccinating children aged 12 to 17 against COVID -19 and that it was considering giving high-risk healthcare workers a boost with Johnson & Johnson’s vaccine.

– The rand firmed on Friday and was on track for a weekly gain thanks to a weaker dollar and higher commodity prices, while stocks were only slightly higher. At the close of trading, the rand was trading R14,55 firmer against the dollar, or 1,57%.

– Oil prices hit their highest level in years this morning as demand continues to recover from the COVID -19 pandemic and power generators increasingly switch from expensive gas and coal to heating oil and diesel. Gold prices rose slightly this morning, recouping some losses after a steep sell-off in the previous session, as US bond yields and the dollar eased and the precious metal regained its appeal.

In Local news

Mediclinic International expects half-year sales to rise
The group expects a significant recovery in group earnings before interest, tax, depreciation and amortisation (Ebitda) to around 15.5%, compared with 12.1% in the previous corresponding period. Effective cost management has enabled the Group to reduce its net debt and improve its cash conversion targets to around 100% of Ebitda, compared to 42% in the previous comparative period. “The group’s continued financial discipline and resilience was demonstrated by the increase in cash and available facilities in the first half to around £770m (1H21: £661m and FY21: £679m),” the group said.

KAROOO LIMITED – Unaudited second quarter and first half 2022 results
Karooooo’s strong growth momentum in subscriber numbers continues. Despite the loss of revenue caused by the July 2021 social unrest in South Africa and the global impact of the pandemic, our business model has increased the number of new subscribers by 20% to 1,408,609 subscribers as at 31 August 2021 (Q2 2021: 1,175,173). Net new subscribers increased by 1% to 42,139 (Q2 2021: 41,626). The Group recorded an operating profit of ZAR346 million in H1 2022 (HY 2021: ZAR368 million), 6% lower than H1 2021. Profit for H1 2022 decreased by 12% to ZAR231 million (HY 2021: ZAR262 million).

International Market Update

– European stocks closed higher on Friday as corporate earnings drove global markets north to close the week. The pan-European Stoxx 600 closed 0.7% higher, with banks the gainers, up 1.7%, while media stocks fell 0.4%. Turning to economic data, French consumer price inflation was negative 0.2% month-over-month in September. On an annual basis, it was 2.7% higher. Meanwhile, French cloud computing company OVH went public on Euronext Paris on Friday.

– U.S. stocks advanced Friday as the Dow Jones Industrial Average posted its best weekly performance since June on better-than-expected third-quarter earnings reports. Goldman Sachs’ results easily beat expectations on both the profit and loss side. The bank’s stock rose 3.8%, making it the biggest gainer in the Dow. Through Friday, 80% of the 41 S&P 500 companies that reported third-quarter results beat expectations on earnings per share, according to FactSet. Retail sales unexpectedly rose 0.7% in September. Economists surveyed by Dow Jones had expected a 0.2% decline.

– Stocks in the Asia-Pacific region traded mostly lower this morning as investors reacted to the release of key Chinese economic data. Chinese gross domestic product grew 4.9% in the third quarter, official data showed Monday. That was below the expectations of analysts polled by Reuters, who had expected growth of 5.2%. Industrial production also fell short of expectations for a 4.5% increase in September, when it rose 3.1%, according to a Reuters poll.

In International news

Goldman Sachs beats analyst estimates thanks to strong results in investment banking and trading
Goldman Sachs beat analysts’ expectations for the third quarter on Friday as investment banking revenue jumped nearly 90% and the bank generated record revenue from equity financing. The bank’s profit jumped 63% to $5.28 billion, or $14.93 a share, while revenue climbed 26% to $13.61 billion. Shares of the New York-based bank rose 2.4%. Goldman – led by CEO David Solomon – is the world’s leading investment banking firm and analysts had expected strong revenue in the quarter due to booming merger and IPO activity. That theme also played out among Wall Street rivals from JPMorgan Chase to Morgan Stanley.

Facebook plans to hire 10,000 people in the EU to achieve its vision of a ‘metaverse’
Facebook plans to create 10,000 jobs in the European Union over the next five years to build a digital world known as the “Metaverse”. The social media giant said on Sunday that it will hire highly skilled engineers in European Union countries. The company is focusing its hiring drive on Germany, France, Italy, Spain, Poland, the Netherlands and Ireland. “Europe is hugely important to Facebook,” Nick Clegg, Facebook’s head of global affairs, and Javier Olivan, vice president of central products, said in a blog post Sunday night. Facebook CEO Mark Zuckerberg unveiled his vision of a metaverse in July. The metaverse is a term used to describe digital worlds where multiple people can interact in a 3D environment.