Daily Market Overview 7 September 2021

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Local Market Update

– Local stocks declined yesterday, led by retail group Steinhoff after a court judge ruled that it has jurisdiction to hear a liquidation bid against the retailer. The proceedings will now continue from later this week. The news overshadowed positive developments regarding its lawsuit settlement proposal, which was approved by majority creditors and claimants on Monday, moving the group closer to finalising a deal that has been a major headache since the company’s restructuring. Overall, the Johannesburg All-Share index fell 0.18% to 66,253 points while the Top-40 index declined 0.12%. Mining stocks were also in the red, with the mining index down 3.57% on weaker commodity prices.

– The rand strengthened on Monday, continuing to trade on the front foot after a disappointing U.S. jobs report dampened expectations of when the Federal Reserve will begin tapering stimulus measures. At the close of the session, the rand traded around R14.23 against the dollar, around 0.96% firmer than its previous close.

– Gold prices firmed on Tuesday, propped up by a softer dollar and prospects of the U.S. Federal Reserve delaying a tapering in its pandemic-era bond purchases. Oil prices were wobbly this morning as investors grappled with demand concerns after Saudi Arabia’s sharp cuts to crude contract prices for Asia.

In Local news

Liquidation proceedings against Steinhoff can proceed
The former owners of Tekkie Town can proceed with their liquidation application against Steinhoff International, after the Western Cape High Court dismissed the intervention application of two parties, and confirmed that the local courts have jurisdiction to hear the case. The court dismissed the applications of SIHNV Financial Creditors (a group representing Steinhoff creditors) and Frederic Verhoeven and Christiaan Robert Zijderveld (two Dutch administrators who were administering settlement proceedings on behalf of Steinhoff in the Netherlands) to intervene and oppose the liquidation application.

Bidvest shrugs off Covid woes with record profit
Bidvest shrugged off the disruptive effects of Covid-19, registering a 47.8% growth in trading profit to R7.9 billion for the year to June 2021. The Services division remains the largest contributor to profit (41%), with geographical contributions more or less equally split between SA and international businesses. Trading profit from this division was up 54.8% to R3.3 billion, despite the negative impacts of Covid on travel and services to hotels and offices. This was to some extent offset by new business opportunities, such as decontamination and cleansing services.

International Market Update

– European stocks closed higher on Monday after U.S. jobs data indicated the Federal Reserve may have to keep monetary policy loose for longer, while speculation has risen over more stimulus in Japan and China. The pan-European Stoxx 600 provisionally closed up by 0.7%, with tech stocks adding 1.6% to lead gains as most sectors and major bourses entered positive territory. The European Central Bank is due to meet this week for its latest policy decision, however analysts expect the bank will wait until December to announce the reduction of its Covid-related stimulus.

– US markets were closed yesterday.

– Shares in Asia-Pacific were mixed in early morning trade, as data showed China’s August trade data came in above expectations. China’s exports jumped 25.6% year-over-year in August, customs data showed today — above expectations for a 17.1% rise by analysts in a Reuters poll. The Nikkei 225 in Japan rose 0.79% while the Topix index advanced 0.92%, with shares in the country continuing to trek upward after two straight trading days of solid gains. That comes as investor sentiment is buoyed by the prospect of more stimulus that has reportedly been called for by prime minister contender Fumio Kishida.

In International news

Total is spending $27 billion in Iraq
TotalEnergies is investing in oil, gas and solar energy projects worth $27 billion in Iraq, returning to the country where the French company made its first energy discovery nearly a century ago. This time, however, no new exploration is planned despite Iraq’s vast oil reserves, reflecting a shift by some major oil companies towards cleaner energy sources as the planet battles rising greenhouse gas emissions. Instead, TotalEnergies will invest in a solar energy plant and projects to improve output from existing oil and gas fields in the country, OPEC’s second largest oil producer.

Chip shortage could last into 2023, says car boss
Covid had been a stress test for the industry, which needed a thorough review of its supply chains, Daimler chairman Ola Källenius said. Supplies of semiconductor chips have been failing to meet demand in a wide range of industries. These include car making, which staged a quick recovery from the pandemic. The shortages had caused shutdowns in Malaysia and would “significantly impact production and sales in the third quarter”, Mr Källenius, who is also head of MercedesBenz, told the BBC at the International Mobility show in Munich.