The Traders' Update, 18-19 July 2024
Realeboha Molaba
Actuarial Junior Consultant; Actuarial Science Honours Graduate from the University of Cape Town; Actuarial Science and Mathematical Statistics Graduate from the University of the Witwatersrand
Segment 1: Overseas Markets
European Markets
Equity markets closed mostly higher as investors digested the European Central Bank (ECB's) interest rate decision, i.e.:
The pan-European Stoxx 600 closed 0.16% lower with tech stocks closing 1.8% lower to lead the losses. Auto stocks led the gains in the region.
On the individual shares front, Swedish vehicle manufacturer Volvo Cars shares surged after the company reported a record core operating profit for the second quarter.
Finnish telecommunication firm Nokia shares plunged after the company reported a 32% drop in its second-quarter operating profit [€423 million (US$462 million)] amid a weak demand for the company's 5G equipment.
The European Central Bank (ECB) kept its benchmark lending rate unchanged at 3.75% after implementing a rate cut in June and the ECB's Governing Council noted that price pressures still remain high and the likelihood of headline inflation remaining above the ECB's target of 2% still remains high.
Asia-Pacific Markets
Hong Kong
The Hang Seng closed 0.22% higher at 17,778.41.
China
Mainland markets closed higher, i.e.:
Japan
Official government data showed that the country's trade balance in June rose to a surplus of JP¥224 billion. A trade deficit of JP¥1.2 trillion (US$7.7 billion) was reported in May.
Exports in June rose by 5.4% year-on-year, higher than the steep 13.5% decline reported in the previous month. Imports grew by 3.2%, down from the 9.5% increase reported in the previous month. Exports and imports missed estimates of +6.4% and +9.3% respectively.
Chip-related stocks plunged on reports that the U.S. was imposing restrictions exports of chips to China.
Broader markets closed lower, i.e.:
South Korea
Korean markets closed lower, i.e.:
Singapore
The Straits Times Index closed 0.53% lower at 3,471.16.
Australia
The Australian Bureau of Statistics reported that the country's seasonally adjusted unemployment rate in June rose to 4.1%, which represents a 0.1% increase from the previous month.
The S&P/ASX 200 closed 0.27% lower at 8,036.50.
Recommended by LinkedIn
U.S. Markets
Equity markets declined on Thursday as investors digested the latest jobs data, i.e.:
Chain restaurant company Domino's Pizza shares plunged to the bottom of the S&P 500 after the company's second-quarter revenue results missed estimates. The company scaled back on its global expansion plans, issuing a warning that it would miss its goal of opening 925 net new international stores in current financial year.
Pharmaceutical firm Eli Lilly shares fell after Swiss competitor Roche released positive early-stage data from its clinical trial of an experimental oral treatment aimed at weight loss. If Roche's drug is approved, then it would increase competition in the expanding market for anti-obesity medication.
Copper producer Freeport-McMoran shares fell on the back of falling copper prices and demand uncertainty significant in the Chinese market.
Homebuilder D.R. Horton shares surged to the top of the S&P 500 after the company reported higher-than-expected revenue and earnings per share (EPS) results for its fiscal third quarter. It also announced a US$4 billion (ZAR72.7 billion) stock buyback programme. The company also lifted its full-year trading forecast for homes closed on the back of strong housing demand.
Energy infrastructure firm Quanta Shares rose after the company announced the acquisition of California-based engineering and construction company Cupertino Electric. The merging of the two entities will create opportunities in the tech industry which is expected to benefit from an increase in demand for comprehensive power solutions.
Supplier of uniforms and other business products Cintas shares also rose after the company's fiscal fourth quarter sales and profit results exceeded market expectations. The firm also noted confidence in its new products and technology that is expected to deliver growth and margin expansion, thus lifting the firm's full-year outlook.
The Bureau for Labor Statistics reported that the number of people applying for unemployment insurance surged for the time in the last week as 20,000 people applied for unemployment insurance. Economists expected around 10,000 people to apply for unemployment insurance.
Segment 2: African Markets
Uganda
The Ugandan Shilling was firmer against the greenback on Thursday as demand for hard currency from both commercial banks and merchandise importers waned. Commercial banks quoted the shilling to trade at 3,685/3,695 per U.S. Dollar compared to Wednesday's closing price of 3,690/3,700.
Sudan
The United States is expected to provide an additional US$203 million (ZAR3,69 billion) in assistance to millions of civilians affected the geopolitical tensions in the country.
Ghana
The International Cocoa Organisation reported that a significant cocoa producing region the country, the second largest in the world, is currently 81% infected with swollen shoot disease.
Segment 3: South African Markets
The South African Reserve Bank (SARB) kept the repo rate unchanged at 8.25% on Thursday with four out of six members voting for the rate to be unchanged. The Monetary Policy Committee members agreed that the SARB's restrictive policy is required to ensure that headline inflation reaches the SARB's target of 4.5%.
Wholesale retailer Pick 'n Pay launched its rights issue programme this week as it seeks to raise around R4 billion (US$220 million) to address its debt burden and hence strengthen its balance sheet. 51.11 rights will be issued at R15.86 per share for every 100 Pick 'n Pay shares held, hence representing a 32.5% discount to the ex-rights share price.
Micro-finance company African Dawn Capital's listing on the Johannesburg Stock Exchange (JSE) was suspended on Thursday after the company failed to comply with JSE listing requirements by failing to publish its financial statements for the financial year ended 29 February 2024.
The Presidency announced on Thursday that a review of the current fuel price formula will be undertaken to identify where prices can be reduced/cut.
The Trade Department plans to proceed in amending regulation 28 of the Pension Funds Act to allow pension funds and other asset managers to invest/finance in/the government's industrial policy initiatives.
Segment 4: JSE Market Morning Update