The Traders' Update, 18-19 September 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 opened higher on Thursday as investors look ahead to the Bank of England's interest rate decision and digested the U.S. Federal Reserve's interest rate announcement, i.e.:
The pan-European Stoxx 600 opened 1% in early morning trade with mining and retail stocks adding 2% and 2.17% respectively to lead the morning gains. Telecommunication stocks fell by 0.36% to be the sole outlier.
On the individual shares front, British retailer Next shares surged after the company reported that it is close to making £1 billion (US$1.32 billion) in annual profits after total group sales in July rose from £2.73 billion to £2.95 billion.
On the data front, the U.K. Office for National Statistics reported that headline inflation in August rose by 2.2% year-on-year and remained unchanged on a monthly basis. It was also in line with market expectations.
Asia-Pacific Markets
Hong Kong
Markets were closed for a public holiday.
China
Mainland markets resumed trading following a two-day holiday and closed higher, i.e.:
Japan
The Ministry of Finance announced that exports and imports in August rose by 5.6% and 2.3% respectively, hence missing analysts' estimates of 10% and 13.4% respectively.
Furthermore, the Cabinet Office reported that private sector machinery orders in July fell by 0.1% month-on-month, lower than the expected 0.5% increase.
Broader markets closed higher, i.e.:
South Korea
Markets were closed for a public holiday.
Singapore
The Straits Times Index closed 0.03% lower at 3,592.42.
Australia
The S&P/ASX 200 closed 0.05% higher at 8,142.10.
U.S. Markets
Equity markets closed lower as investors digested the latest U.S. Federal Reserve's interest rate decision, i.e.:
Medical device maker ResMed shares plunged to the bottom of the S&P 500 after investment analysis firm Wolfe Research downgraded the stock's rating to "underperform" citing that it expects disruption in demand for the company's devices to treat sleep apnea. The Food and Drug Administration (FDA) is likely to approve the drugmaker Eli Lilly's weight-loss drug for the treatment of sleep apnea. The research firm showed that half of doctors expect to prescribe fewer sleep apnea devices to patients as they gain access to Eli Lilly's weight-loss drug.
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Provider of labeling and packaging solutions Avery Dennison shares fell after the company reported that it still remains sensitive to the availability and pricing of raw materials and its destocking also impacted the company's performance. However, the company reported that it expects key trends in "digitization, sustainability and personalization" to underpin demand for its intelligent labels and other products.
Wholesale food distributor Sysco shares fell after the company's CEO reported that global restaurant industry traffic fell by around 3% in the most recent quarter and it is expected to soften further in the current quarter. However, the company's executive remains confident in its full-year guidance.
Provider of injectable drug packaging and delivery solutions West Pharmaceutical Services shares rose to the top of the S&P 500 after the company reported that it expects organic revenue growth in the fourth quarter citing that destocking headwinds could wind down. However, in its most recent earnings report in July, the company reduced its full-year sales and profit outlook due to reduced demand from biotech customers.
Discount retailer Dollar Tree shares rose after an article in the Wall Street Journal noted that the company is exploring an aggressive business strategy by opening many stores despite navigating through a challenging environment. Sentiment shows that there is confidence that store openings in new locations can increase sales growth and market share gains. However, the stock has been under pressure since the beginning of 2024 due to a strained consumer spending environment and it is seeking strategic options for its "struggling Family Dollar segment".
Carmaker General Motors shares advanced after the company reported that it plans to offer adapters to owners of electric vehicles (EVs) to be able to access te network of charging stations operated by Tesla. Furthermore, the company struck a deal with workers at an EV and battery plant in Canada thus reducing the likelihood of a "work stoppage" at the facility.
In central bank news, the U.S. Federal Reserve cut its federal policy rate by 50bps for the first time since 2020 to a range of 4.75% to 5%. It plans to continue on its interest-rate cutting cycle in the coming months in an attempt to boost the economy and prevent unemployment from rising.
Segment 2: African Markets
Mauritius
South African lender Standard Bank announced that small to mid-sized businesses operating on the continent are allowed to access banking solutions from the lender in Mauritius.
Botswana
The government has awarded manganese-mining company Giyani Metals a 15-year mining licence and the company is the country's first battery-grade manganese producer.
Ghana
Ghana Statistical Services reported that the economy expanded by 6.9% year-on-year in the second quarter of 2024, and this is the fastest rate of expansion in five years.
Segment 3: South African Markets
The South African Reserve Bank (SARB) is expected to deliver its interest rate decision on Thursday afternoon and experts are expecting a 25bps rate cut. Headline inflation in August slowed to 4.4% year-on-year and has consistently remained in the SARB's inflation target band of 3% to 6%.
Lender Standard Bank has expanded its Mauritius offshore business offering for SMEs operating on the African continent looking to access all the benefits Mauritius has to offer as Africa's leading International Finance Centre (IFC).
The Association for Savings and Investment South Africa (ASISA) reported that assets under management (AUM) in the second quarter rose by 2% quarter-on-quarter and by 8.3% year-on-year to R3.64 trillion (US$210 billion) mainly due to strong performance of the Johannesburg Stock Exchange (JSE) and local government bonds. However, the industry recorded a total net outflow of R30 billion (excluding reinvestments) and reinvestments totaled R24 billion.
Insurance conglomerate OUTsurance shares rose to a record high after the company released its full-year earnings report and showed that its full-year profits rose. It also declared a special dividend of 40 cents per share and it will increase the total dividend payable for the financial year to R1.74 per share.
Lender FNB's FNB Connect sim business generated a total revenue of R18.6 billion (US$1.07 billion) in the last year. There were 958,000 active SIM cards, as well as Lotto and electricity sales.
New lender Old Mutual Bank, which forms part of insurance conglomerate Old Mutual Limited, announced that it now has 1 million clients signed up for its transactional banking capability. The bank has completed its bank-build process at a start-up cost of R1.75 billion (US$100 million).
Swiss multinational food and drink processing company announced its intention to divest its Nestle Cremora business which Nestle South Africa acquired in 1993.
Hospitality company Southern Sun released its preliminary trading update for the six months through September, i.e.:
Stellenbosch-based diversified investment holding company Remgro reported its financial results for the 2024 financial year, i.e.:
Insurance conglomerate Discovery Group released its financial results for the year through June 2024, i.e.:
Segment 4: JSE Lunch-Time Market Update