Daily Market Overview 20 October 2021

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Local Market Update

  • The Johannesburg Stock Exchange’s All-Share Index settled at 66,776, down 0.02%, while the top 40 index was down 0.05%. A rally in technology stocks failed to boost equities, while commodity stocks weighed on the bourse. The commodities index fell 0.53%, led by miner Glencore, which lost 4.1%. This week’s local data calendar is sparse, with the Consumer Price Index for September on Wednesday likely to draw the most attention and set the tone.
  • The rand rose on Tuesday, recouping losses from the previous day thanks to a weaker dollar, while equity markets closed little changed as they struggled to find direction. At the close of trading, the rand was 1.11% firmer against the dollar, trading around the R14.53 mark. The currency had weakened on Monday after Chinese economic data for the third quarter showed the slowest pace of growth in a year, prompting investors to sell riskier assets such as the rand.
  • Gold prices edged lower this morning as rising U.S. bond yields hurt the metal’s appeal and bets on upbeat corporate earnings fueled risk sentiment. Oil prices eased after the Chinese government indicated it is looking for ways to tame record-high coal prices and will ensure coal mines operate at full capacity as Beijing tries to ease energy shortages. Chinese coal prices and other commodities fell in early trading, which in turn dragged down oil prices after a rise earlier in the day.

In Local news

Acsa’s annus horribilis: FY hits R2.6bn loss

Airports Company South Africa (Acsa) – the state-owned monopoly that controls nine of the country’s major airports – on Tuesday reported a loss of R2.6 billion for the financial year ending March 31, 2021. This is the worst financial performance in Acsa’s 28-year history, the group’s chief financial officer, Siphamandla Mthethwa, confirmed during a presentation of the results. The group’s revenue fell from 7.1 billion rupees in the financial year ending March 2020 to R2.2 billion rupees in the 2021 financial year.

It should be noted that much of the 2021 financial year consists of last year, when Covid-19 harsh lockdowns and travel restrictions affected the start of the first half of the year in April. Regarding the financial impact of Covid-19, Mthethwa said he believes “the worst is over.”

Economic recovery not responsible for demand for new vehicles outstripping supply – CMH

The perception by some that the economic recovery is responsible for demand for new vehicles temporarily outstripping supply is wrong, JSE-listed vehicle retailer Combined Motor Holdings (CMH) warned on Tuesday. Group revenue for the period was still 3.8% lower than the

R5.7 billion reported for the same period in 2019. Operating profit improved by 426.5% from R48.6 million to R256.1 million, 28% higher than the R200.06 million reported in 2019, while earnings per share increased by 1 529% to 200 cents from the loss per share of 14 cents in the previous period, 65% higher than the 120 cents reported in 2019. An interim dividend of 110 cents per share was declared.

International Market Update

  • European stocks closed higher on Tuesday as investors watched corporate earnings and rising coronavirus cases in countries such as Britain. The pan-European Stoxx 600 closed 0.4% higher, with utilities up 1.4% while food and beverage stocks fell 1%. Danone, Kering, Vinci and Deutsche Boerse released their results on Tuesday, while BHP presented an operating report. Among individual stocks, German mass media company ProSiebenSat 1 climbed 5.6% to lead the Stoxx 600.
  • S. stocks advanced Tuesday as major companies continued to report strong third-quarter results, allaying fears that the ongoing covid case and rising costs could wipe out the earnings recovery for American companies. The Dow and S&P 500 are now less than 1% off their respective all-time highs. Shares of Dow member Travelers rose 1.6% after the insurance company’s quarterly report beat expectations.
  • Stocks in the Asia-Pacific region were mixed this morning. China left its benchmark one-year lending rate (LPR) unchanged at 3.85% today, while the five-year LPR was also held at 4.65%. This was in line with the expectations of the majority of traders and analysts who had expected no change in both the one-year and five-year policy rates in a Snap Reuters poll. Debt-laden property developer China Evergrande Group has shelved plans to sell a majority stake in its property services business, Reuters reported.

In International news

J&J Covid vaccine boosts third-quarter sales by $502 million

Johnson & Johnson sold $502 million of its Covid-19 vaccine in the third quarter, beating Wall Street’s profit expectations. J&J raised its full-year earnings forecast to $9.77 per share to $9.82 per share, up from previous estimates of $9.60 to $9.70 per share. The company expects revenue between $94.1 billion and $94.6 billion, compared with a previous forecast of $93.8 billion to $94.6 billion. At the same time, the company maintained its sales forecast for its Covid vaccine at $2.5 billion.

Netflix tops earnings and adds subscribers

Shares of Netflix fell about 1% in after-hours trading Tuesday after the company reported its third-quarter results, showing investors that the streaming service continues to add subscribers. Earnings per share (EPS) were $3.19 versus $2.56, according to Refinitiv, and revenue was $7.48 billion versus $7.48 billion. Subscriber growth of 4.4 million in the quarter topped the expected 3.84 million. Analysts had expected users to flock to the streamer as the company began releasing a slew of content that had been delayed until the second half of the year because of the pandemic. The company said it expected to add 8.5 million new subscribers in the fourth quarter.