Daily Market Overview 6 September 2021

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Local Market Update

– Local stocks closed lower on Friday, with the Johannesburg Stock Exchange’s Top-40 Index slipping 0.42% to 60,107 points and the broader All-Share Index falling the same amount to 66,372 points. While gold and platinum companies all rose, thanks to the price of their metals shooting up following the U.S. jobs data, companies that tend to suffer when the rand is stronger slipped back.

– The rand got a boost Friday after a closely watched U.S. jobs report came in well below expectations, meaning the United States’ central bank is likely to hold off on scaling back its massive stimulus measures. At the close of the session, the rand was trading around R14.37 to the dollar or 0.65% firmer.

– Gold prices hovered below a 2-1/2-month peak this morning after a disappointing U.S. jobs data signalled that the Federal Reserve could push back the timeline for tapering stimulus measures, bolstering bullion’s appeal as an inflation hedge. Oil prices extended losses this morning after the world’s top exporter Saudi Arabia slashed crude prices for Asia over the weekend, signalling that global markets are well supplied.

In Local news

WBHO reports rebound in SA private sector investment
JSE-listed construction and engineering group WBHO reported a rebound in private sector investment levels in South Africa and has grown its South Africa order book by 40% year on year in the year to end-June. WBHO Group CEO Wolfgang Neff said the group’s South African order book grew to R11.85 billion at end-June from R8.48 billion in June 2020 because of increased activity in particular in the building division and a positive outlook for its roads and earthworks business.

Ascendis will spend R290m – more than its market cap – on recapitalisation
Ascendis Health, which is labouring under a mountain of around R7 billion in debt, will spend approximately R258 million on fees for its recapitalisation transaction according to the transaction circular published on Friday. Add two disposals which are linked to the recapitalisation plan, and the fees will top R290 million. The group currently has a market value of just R274.1 million. Of the R258 million, R110.5 million will be paid to Akin Gump, the UK legal advisors to the forbearance creditors. Acsendis Health’s legal advisors, Allen & Overy, will be paid nearly R57 million, while deal advisor Rothschild will be paid R33.6 million.

International Market Update

– European markets closed lower on Friday as investors reacted to key economic indicators out of the euro zone and the U.S. The pan-European Stoxx 600 provisionally closed 2.58% down, with basic resources adding 2.32% while travel and leisure stocks slid 2.33%. Euro zone business activity remained robust in August despite the impact of the Delta variant of Covid-19 and broad supply chain problems. The final IHS Markit composite PMI (purchasing managers’ index) reading for the bloc dropped to 59.0 from July’s 15-year high of 60.2, remaining well clear of the 50 mark that separates expansion from contraction.

– The Dow Jones Industrial Average retreated on Friday and the S&P 500 slipped from a record high after the August jobs report came in short of expectations, showing the impact of the delta-fueled Covid resurgence. Nonfarm payrolls increased by 235,000 in August, the Labor Department said Friday. Economists surveyed by Down Jones were expecting 720,000 jobs.

– Asia-Pacific stocks were higher this morning following U.S. jobs data released Friday that came in far short of expectations. Japan’s Nikkei 225 led gains among the region’s major markets, rising 1.89%. That followed its surge of 2.05% on Friday after Japanese Prime Minister Yoshihide Suga said he will not be running in the upcoming leadership election.

In International news

Ikea struggles with supply problems due to driver shortage
Furniture giant Ikea is struggling to supply about 1,000 product lines as a shortage of HGV drivers continues to hit businesses. The company said the shortage of products, including mattresses at some stores, was down to Covid and Brexit. Businesses ranging from flu vaccine suppliers to food and drink firms have also been suffering from supply issues. The government has previously said it is “working closely with industry to address sector challenges”.

Pfizer Covid booster shots will likely be ready Sept. 20.
The U.S. will likely start to widely distribute Pfizer Covid-19 booster shots during the week of Sept. 20, but the rollout for Moderna’s vaccine could be delayed, White House chief medical advisor Dr. Anthony Fauci said Sunday. The Biden administration has announced plans to offer third doses to people who received the Pfizer and Moderna shots, pending approval from public health officials. The U.S. recommends an additional shot eight months after the second dose