Daily Market Overview 8 October 2021

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Local Market Update

– Stock markets around the world rallied Thursday as the U.S. temporarily unblocked a political stalemate that threatened to push the United States into default. Overall, the FTSE/JSE All-Share Index rose 0.53% and the FTSE/JSE Top 40 Companies Index closed up 0.47% on Thursday as Markets mostly rise as US default fears recede The dollar trended mixed against its major peers ahead of U.S. jobs data expected on Friday. The rand last traded at R14.93/$.

– Oil prices rose on Friday and are up 4.2% this week on signs that some industries have begun switching from expensive gas to oil and doubts that the U.S. government will release oil from its strategic reserves for now.

In Local news

Santam accepts court judgement against them, says that about 1,000 claims are involved
The Supreme Court of Appeal (SCA) has dismissed Santam’s appeal regarding the applicable business interruption compensation period for Ma-Afrika Hotels and The Stellenbosch Kitchen. This means that the insurer must pay business interruption benefits to the establishments for 18 months – unless it decides to take the matter to the Constitutional Court. However, in a statement, the company said it “accepts the outcome of the appeal, which provides the legal clarity the company has been seeking”. The court ruled that the 18-month indemnity period referred to by Ma-Africa in the main body of its business interruption policy, which deals with property damage, also applies to the extension of the policy to include contagious and infectious diseases.

Foschini expects profits to jump, but 29 stores remain closed due to looting
In a trading statement for the six months to the end of September, Foschini Group said it expects earnings per share of more than 364.0 cents per share – compared with a loss of 91 cents per share. Following civil unrest in KwaZulu-Natal and Gauteng in July, the company said it will claim R613 million from insurer SASRIA. So far it has received R200 million. Further payments are expected in the second half of the financial year. In the robberies, 198 stores were looted and damaged. 29 of these remain closed and will not reopen until 2022 due to extensive structural damage.

International Market Update

– U.S. stocks rose on Thursday as investors welcomed the announcement that lawmakers had agreed to raise the federal borrowing limit through December, averting a potentially devastating default.

– The benchmark S&P 500 index rose slightly, while the tech-heavy Nasdaq also gained. The Dow Jones Industrial Average jumped more than 300 points.

– Asia-Pacific shares outside Japan rose 0.5% after gaining 2.1% the previous day, the biggest daily gain since August. Japan’s Nikkei index rose 1.8%. Chinese blue crisps added 0.56% as they resumed trading after being closed for the national holiday, while Hong Kong, which was open all week, rose 1%.

In International news

The rise of cryptocurrencies could challenge the dominance of the U.S. dollar, according to a new Fed paper
The U.S. dollar’s dominant role in global markets is likely to continue, but the rapid rise of cryptocurrencies could threaten that status, according to a new paper from the Federal Reserve. Private digital currencies such as Bitcoin and Ether, as well as government-backed currencies, could reduce reliance on the US dollar, Fed economists Carol Bertaut, Bastian von Beschwitz and Stephanie Curcuru write in their paper, “The International Role of the US Dollar.” They argue that consumer and investor preferences are changing and that new products could shift the balance between perceived costs and benefits.

Evergrande has reportedly missed bond payments recently as the developer struggles to stave off a default
Evergrande continued to falter this week as the vulnerable real estate developer missed a key payment deadline, according to a report from Bloomberg. The report, citing people familiar with the matter, said a Chinese company co-owned by Evergrande called Jumbo Fortune Enterprises missed a $260 million bond payment. The news sent Evergrande’s bonds plummeting to new lows – they now trade at less than a quarter per dollar. Exact details about the privately issued bond were hard to come by, but the incident signaled to markets that a partial default is more likely than previously thought. Observers have been wondering for weeks whether the Chinese government will step in to prop up Evergrande after urging the company to avoid a short-term default.