Daily Market Overview 4 October 2021

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Local Market Update

– Local stocks fell tracking moves in global shares on Friday. The Top-40 index closed 1.03% lower at 57,265.62 while the broader all-share was down 0.97% to 63,661.02. Recent domestic data has been better than predicted and the economy performed strongly in the first half of the year. Still, the central bank said last week that it thought the bounce-back from the COVID-19 pandemic was mostly done. Data on Friday showed South African manufacturing activity improved in September but at a slower pace than August.

– The rand rose against an easing dollar on Friday, erasing some of the losses suffered in the week as currency markets braced for a rise in U.S. interest rates. At the close of the session, the rand was trading around the R14.88 mark versus the dollar, 1.16% firmer.

– Gold prices hit a near two-week peak this morning, as a weaker dollar offset bets that the U.S. Federal Reserve could begin tapering its pandemic-era asset purchases soon. Oil fell earlier today ahead of an OPEC+ supply policy meeting that may decide whether a recent rally in prices can be sustained as the world fitfully recovers from the COVID-19 pandemic. Oil prices have risen amid supply disruptions and recovering global demand, pushing Brent last week to an almost three-year high above $80.

In Local news

PIC’s externalised assets grew 31% in the year to March
The Public Investment Corporation’s (PIC’s) externalised assets grew by 31% to R395 billion at the end of March 2021. This was up from R301 billion in March 2020 according to the PIC’s annual report released last week. The asset manager attributed most of these gains to the performance of global and domestic equities, which significantly outperformed other asset classes from an absolute return perspective over its financial year. The PIC’s external managers comprise eight global and 20 domestic firms that manage R178 billion and R217 billion respectively.

Discovery delays medical aid contribution increases again
Discovery Health Medical Scheme (DHMS) will again delay the implementation of its annual contribution increases because of “the decline in non-Covid-19 healthcare claims seen over the course of the pandemic,” says Discovery Health CEO Dr Ryan Noach. Annual contribution increases of 7.9% will only be implemented from May 1 next year. This follows a six-month delay in implementing the increases for this year. Discovery says this makes DHMS the only medical scheme to have deferred contribution increases twice since the onset of the pandemic. It says the contribution relief to members totals over R4 billion.

International Market Update

– European stock markets closed lower on Friday as economic data showed euro zone inflation jumped to a 13-year high. The pan-European Stoxx 600 closed down by 0.4%, recouping some of its earlier losses having been down as much as 1.7% at the start of trading. Mining stocks slipped 1.3% to lead losses while travel and leisure shares jumped 3%. Euro zone inflation in September rose 3.4% on an annual basis, official data showed Friday, the highest reading since September 2008 and up from 3% in August.

– U.S. stocks pushed higher on Friday as investors shook off a rough September and news of a new oral treatment for Covid-19 boosted shares of companies tied to the economic recovery. Shares of Dow member Merck jumped close to 8.4% after the drug maker and Ridgeback Biotherapeutics said their oral antiviral treatment for Covid-19 reduced the risk of hospitalization or death by 50% for patients with mild or moderate cases. The companies plan to seek emergency authorization for the treatment.

– Shares in Asia-Pacific were mixed in early morning trade after Merck announced its new Covid oral antiviral treatment that cuts the risk of hospitalization or death. Trading in the Hong Kong-listed shares of China Evergrande was halted on Monday as investors continue to monitor the situation surrounding the indebted developer.

In International news

Tesla delivered 241,300 vehicles in the third quarter, topping expectations
Tesla delivered 241,300 electric vehicles during the third quarter of 2021, the company reported Saturday. The quarter’s deliveries topped expectations. Analysts predicted that Tesla would deliver around 220,900 electric cars during this period, according to estimates compiled by StreetAccount as of September 30. The company produced 237,823 cars in the period ending September 30, 2021, Tesla said in its report

Debt-laden China developer’s shares suspended
Shares in its property services unit were also suspended. The Hong Kong Stock Exchange did not say why trading had been halted or who initiated the suspensions. The China-based company’s problems have rocked markets over concerns about its more than $300bn (£222bn) of debt. Shares of Evergrande and its Evergrande Property Services Group unit were halted and “all structured products relating to the company will also be halted from trading,” a regulatory filing with the Hong Kong stock exchange said.