Daily Market Overview 7 October 2021

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Local Market Update

– Local stocks followed global peers lower, with the Johannesburg All-Share index falling 0.86% and the Top-40 index down 0.99%. Among the decliners were mining companies led by Anglo American down 3.10%, with the resources index falling 1.68% on certain weaker commodity prices such as gold, silver and palladium.

– The rand retreated on Wednesday, pressured by a firmer dollar and rising U.S. Treasury yields, as nervousness that surging energy prices will stoke inflation and interest rate hikes drove investors towards safe haven assets. At the close, the rand was trading around R14.97 to the dollar, 0.01% firmer. On Wednesday, the focus returned to global events, chiefly U.S. jobs data to be released on Friday when investors will seek clues on the timing of Federal Reserve policy tightening.

– Gold prices were flat this morning as the dollar held firm, as investors moved to the sidelines
ahead of a U.S. payrolls report that is expected to provide clues on the Federal Reserve’s tapering timeline. Oil prices dropped for a second session earlier today, under pressure from an unexpected rise in U.S. crude stocks that raised concerns over demand after prices rallied to multi-year highs.

In Local news

The net asset value per share increased by 19.3%, from 373 cents per share at 31 August 2020 to 445 cents per share at 31 August 2021, mainly as a result of the increased valuations of TLG, Capespan and Kaap Agri, countered by the special dividend paid to shareholders during the reporting period. Headline earnings per share increased from a loss of 14.3 cents per share to a gain of 31.4 cents per share mainly as a result of the increased valuations of TLG, Capespan and Kaap Agri since the prior comparative reporting period.

Total annualised rent roll increased by 3.3% to €99.7 million and, with a modest contribution in the first half of the financial year due to the timing of completions, the impact from acquisitions is expected to be greater in the second half. Like-for-like occupancy remained broadly flat at 86%, whilst total occupancy reduced to 85% (March 2021: 87%) primarily as a result of the acquisition of 23,000 sqm of vacant space within the Essen and Ohringen assets that completed within the period. In line with its strategy, the Company intends to utilise its asset management platform to increase occupancy and net operating income at these assets.

International Market Update

– European stocks closed lower on Wednesday as U.S. Treasury yields briefly spiked, with inflation concerns continuing to weigh on global markets. The pan-European Stoxx 600 provisionally ended down 1%, with all sectors and major bourses in negative territory. Retail, autos and travel and leisure stocks were among those leading the losses, down over 2.5%. In terms of individual share price movement in Europe, British grocery giant Tesco climbed almost 6% after upgrading its outlook following strong first-half results.

– US stocks staged a comeback on Wednesday as investors grew optimistic about a debt ceiling deal and bought into technology stocks. Stocks reversed course on news that Senate Minority Leader Mitch McConnell told a closed meeting of Republicans that he would offer a short-term debt ceiling extension later Wednesday. That would help relieve some pressure on Congress to avoid a U.S. default currently expected on Oct. 18. Investors bought the dip in some key technology stocks. Microsoft rose 1.5%, Amazon gained nearly 1.3%, and Nvidia popped 1.2%.

– Shares in Asia-Pacific rose in early morning trade, with Hong Kong stocks leading gains. The Hang Seng index in Hong Kong jumped 2.2% as shares of Chinese tech giants Tencent and Alibaba rose 3% and 4.44%, respectively. Mainland China markets remain closed on Thursday for the holidays.

In International news

Levi Strauss earnings beat as new denim styles drive sales growth
Levi Strauss & Co. on Wednesday reported fiscal third-quarter earnings and sales that topped
analysts’ expectations, as consumer demand picked up during the back-to-school season and
shoppers looked to stock up on the latest denim trends. Net income rose to $193 million, or 47 cents per share, from $27 million, or 7 cents a share, a year earlier. Excluding one-time items, the company earned 48 cents per share. Analysts had expected profits of 37 cents per share. Revenue rose 41% to $1.5 billion from $1.06 billion a year earlier. That slightly topped estimates of $1.48 billion.

Tesco shrugs off supply concerns as sales surge
Tesco’s group revenues jumped by 5.9% to £30.4bn for the six months compared with the same period last year. Operating profits increased by 28% to £1.3bn for the period. Sales in the first six months of Tesco’s financial year rose 2.6% to £27.3bn, while UK like-for-like sales rose 1.2%, having risen 0.5% in the first quarter.