Daily Market Overview 2 September 2021

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Local Market Update

– The Johannesburg Stock Exchange’s Top-40 index closed 0.7% lower at 60,613 points, and the broader All-Share Index slipped by almost the same amount to 66,976 points. Miner BHP Group, also listed in London, dragged the blue-chip index lower, falling over 8.6%. It was among the companies forced to evacuate workers ahead of Hurricane Ida in Louisiana, where energy companies are now struggling to get staff back on site amid infrastructure damage.

– The rand extended recent gains on Wednesday, continuing to track the dollar and signals about when the U.S. Federal Reserve might begin paring back its massive pandemic-era stimulus. At the close of the session, the rand was 0.76% firmer versus the dollar as it traded around the R14.42 mark. The rand has notched up gains of more than 3% against the greenback since the start of Friday, when Fed Chair Jerome Powell gave a dovish speech that suggested the U.S. central bank was in no rush to raise interest rates.

– Oil prices fell this morning after OPEC+ agreed to keep its policy of gradually returning supply to the market at a time when coronavirus cases around the world are surging and many U.S. refiners, a key source of crude demand, remained offline. Gold prices held steady earlier today ahead of the U.S. non-farm payrolls data that is crucial to the Federal Reserve’s tapering plan, even as a private payrolls report missed expectations.

In Local news

Cashbuild surges over 7% on solid FY performance and hefty dividend
The group reported a spike in full year profit and declared a hefty dividend, driven largely by the home improvement boom linked to the Covid-19 pandemic. Cashbuild posted a 152% increase in headline earnings per share (Heps), the main profit measure in South Africa, to 2 872.6 cents for the year from 1 138.5 cents in the previous period. The group reported a 100% increase in operating profit to just over R1 billion, compared to R520 million in the previous year. It also posted a 25% increase in revenue to R12.6 billion, from R10 billion in the previous year.

Pre-owned vehicles selling for more than book value – Motus
This was confirmed by Osman Arbee, CEO of JSE-listed motor retail group Motus on Wednesday. Motus reportedly sells one in every five new vehicles sold in South Africa.Arbee told Moneyweb that the shortage of pre-owned vehicles has been caused by constraints on the supply of new vehicles globally and in South Africa in the wake of the global semiconductor shortage. However, he said these shortages have not resulted in dealerships starting to see losses due to not having vehicles to sell. “We are still continuing to sell new vehicles that we have and are being supplied preowned vehicles while the workshops and parts business are doing quite nicely as well,” he said.

International Market Update

– European stocks closed higher on Wednesday as investors shrugged off hotter-than-expected euro zone inflation data. The pan-European Stoxx 600 ended Wednesday’s session up by 0.5% provisionally, with retail shares jumping 1.9% to lead gains while basic resources slid 0.6%. German retail sales slipped by more than expected in July, the Federal Statistics Office said Wednesday, dropping 5.1% month-on-month in real terms against a Reuters forecast for a 0.9% fall. This followed gains of 4.5% in June and 4.6% in May.

– The S&P 500 closed the first trading day of September near the flatline as the strength in technology shares faded, while investors digested a disappointing employment report. U.S. companies created far fewer jobs than expected in August, with private payrolls rising just 374,000, according to payroll services firm ADP. That was well below the Dow Jones estimate of 600,000. The ADP report is a precursor to the official August U.S. non-farm payrolls data, which will be released Friday. Economists polled by Dow Jones expect 720,000 jobs were created in August and the unemployment rate fell to 5.2%.

– Shares in Asia-Pacific were mixed in early trade as Australia reported a higher-than-expected trade surplus in July. The S&P/ASX 200 in Australia shed 1.07%. Australia recorded a trade surplus of 12.117 billion Australian dollars (about $8.93 billion) in July.

In International news

Chinese regulators summon 11 ride-hailing firms, including Didi
Chinese regulators have summoned and interviewed 11 ride-hailing firms asking them to rectify non-compliant behaviour. The Ministry of Transport, along with a number of other regulators including the Cyberspace Administration of China and State Administration of Market Supervision, jointly interviewed the companies including Didi, T3 and Meituan. Chinese regulators alleged that the services are recruiting unapproved drivers and vehicles.

Chewy shares tumble after pet retailer’s earnings and forecast disappoint
Chewy saw revenue rise nearly 27% on a year-over-year basis to $2.16 billion in the second quarter, but analysts were expecting sales of $2.20 billion, according to Refinitiv. The company also lost 4 cents per share, compared with estimates of a loss of 2 cents per share, according to Refinitiv. Chewy’s third-quarter sales guidance of $2.20 billion to $2.22 billion also came in slightly lighter than expectations. Analysts projected $2.23 billion in third-quarter sales, according to StreetAccount.