Daily Market Overview 29 September 2021

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Local Market Update

– Johannesburg-listed stocks were lower yesterday, with the JSE All-Share index trading 0.64% lower and the JSE Top 40 index posting a 0.56% decline. Financials added 1.34% on the day, while resources shed 1.50%. On the blue-chip index, Impala Platinum and Mr Price were the biggest laggards, losing 3.91% and 3.19% respectively. Focus this week is on various economic data including August credit numbers, producer price inflation and trade figures, all due on Thursday.

– The rand was softer yesterday as an energy crisis and Chinese growth concerns batter the South African currency and worsen the country’s inflation outlook. The rand posted its third straight daily loss and was 1.04% softer versus the dollar at the end of the session, as it traded around the R15.10 mark.

– Gold prices were flat near a seven-week low earlier today, pressured by a rise in the dollar and U.S. Treasury yields on growing expectations of an earlier-than-anticipated interest rate lift-off. Oil prices fell for the second straight day as doubts re-emerged over demand, with COVID-19 cases continuing to rise worldwide and gasoline shortages in some regions

In Local news

PPC secures R2.1bn in new facilities from its SA lenders
JSE-listed cement and building materials producer PPC has secured R2.1 billion in new finance facilities from its South African lenders and will no longer be proceeding with a planned equity capital raise. PPC confirmed on Tuesday it has signed non-binding term sheets with its South African lenders to refinance its existing debt obligations and remove the undertaking for a capital raise. It also provided details about its double-digit increase in cement sales in the six months to end-September 2021 and the outlook for the group. The capital raise undertaking was aimed at enhancing PPC’s financial flexibility and degearing its South African balance sheet.

Huge Group sells its minority stake in Adapt IT
Huge Group has abandoned its efforts to play a role in the future of Adapt IT. That much is clear after it emerged on Tuesday that it has sold the shares it acquired as part of its earlier aggressive pursuit of the JSE-listed software services group. Adapt IT, which published its 2021 financial results on Tuesday, confirmed that Huge Group had sold the 1.9% of the group it acquired through its unsolicited share-swap offer to Adapt shareholders. Adapt IT is now very likely to be acquired by another suitor, Canada’s Volaris Group, and delisted from the JSE.

International Market Update

– European stocks closed sharply lower on Tuesday as global investors monitored a spike in U.S. bond yields and Chinese growth concerns. The pan-European Stoxx 600 closed down by around 2% provisionally, with tech stocks dropping 4.4% to lead the losses. European markets also continued to digest the fallout of the German election on Tuesday after the vote on Sunday resulted in more uncertainty for the country. The center-left Social Democratic Party (SPD) gained the largest share of the vote with 25.7% by a slim margin, with Angela Merkel’s right-leaning bloc of the Christian Democratic Union and Christian Social Union gaining 24.1% of the vote.

– U.S. stocks fell sharply on Tuesday, with tech names dragging down the broader markets as Treasury yields traded near three-month highs and lawmakers in Washington continued their budget stalemate. The 10-year Treasury yield continued its speedy climb on Tuesday, rising as high as 1.567% as investors bet the Fed would carry through on its promise to curb its emergency bond buying stimulus as inflation jumps.

– Asia-Pacific stocks fell in early morning trade today following an overnight tumble on Wall Street, with the Nasdaq Composite plunging nearly 3% as bond yields rise. Tech stocks slipped in today, with shares of Japanese conglomerate Softbank Group falling 2.33% and South Korea’s Samsung Electronics dropping 2.62%.

In International news

EV start-up Lucid begins production of flagship Air sedan
Electric vehicle start-up Lucid on Tuesday said production of its first cars for customers is underway, with deliveries scheduled to begin late next month. Lucid is the first EV start-up that went public through a SPAC deal to actually produce a saleable vehicle for consumers. The milestone is crucial for Lucid, which debuted on the Nasdaq in July and is viewed as a front-runner to rival EV leader Tesla. “I’m delighted that production cars endowed with this level of efficiency are currently driving off our factory line,” Lucid CEO Peter Rawlinson, a former chief engineer and vice president of engineering at Tesla, said in a statement.

Evergrande: Struggling firm to raise $1.5bn as debt payment looms
Chinese property giant Evergrande has said it is selling a $1.5bn (£1.1bn) stake it owns in a commercial bank, as it scrambles to raise money owed to customers, investors and suppliers. The almost 20% stake in state-owned Shengjing Bank is effectively being bought back by the bank. It comes after Evergrande missed a bond interest payment on Friday. The cash-strapped company also faces a deadline on Wednesday for another bond interest payment of $47.5m.