Asian markets track Wall St losses but sterling bounces
Asian equities dropped Monday, tracking a selloff on Wall Street as last week's rally ran out of steam on fresh worries about rising interest rates and surging inflation.
The pound rose, however, after British Prime Minister Liz Truss replaced her finance minister and speculation swirled that she would row back on more of the debt-fuelled, tax-cutting budget that sent shivers through finance markets.
The healthy gains Asian markets enjoyed on Friday were largely wiped out in early trade as expectations about elevated prices and central bank moves to rein them in continued to fan recession fears.
Last week's strong US inflation reading ramped up bets that the Federal Reserve will hike borrowing costs by 75 basis points twice more before the end of the year, stoking concerns the world's top economy will flip into a recession.
All three main indexes on Wall Street finished sharply lower Friday, and Asia followed suit Monday.
Hong Kong shed more than one percent and Shanghai was also in the red, with Chinese President Xi Jinping at the weekend reasserting his commitment to the zero-Covid strategy of lockdowns that has hammered the economy this year.
There were also losses in Tokyo, Sydney, Seoul, Singapore, Taipei, Jakarta and Wellington.
Traders are also keeping tabs on looming earnings reports, with expectations that higher rates and prices will have eaten into companies' bottom lines.
They will also be keeping a close eye on the United Kingdom as Truss battles for her political future just weeks after taking the keys to Number 10.
She sacked her finance minister Kwasi Kwarteng on Friday after coming under intense pressure following his controversial tax-cutting mini-budget.
His replacement, Jeremy Hunt, looked set to roll back several of the measures in a bid to reassure markets.
"It does indicate that they are moving back to some degree of fiscal probity and employing a slightly more prudent fiscal outlook," said Peter Kinsella, of Union Bancaire Privee UBP SA.
The pound was holding above $1.12 in Asian trade, having sunk Friday owing to the uncertainty in Westminster, while a news conference by Truss did very little to reassure nervous investors.
Eyes are also on Tokyo as the yen sits around a three-decade low against the dollar owing to US rate hike expectations and the Bank of Japan's refusal to tighten monetary policy, citing a need to support the economy.
The yen is approaching 150 to the dollar for the first time since 1990, but while officials have said they are keeping tabs on developments, they have yet to intervene in markets for a second time, having done so last month.
15 October 08:12
Pound slides amid UK political drama
The pound fell on Friday after under-fire British Prime Minister Liz Truss sacked her finance minister and made a dramatic policy U-turn, while an equity rally ran out of steam.
The rand weakened to R18.36/$ and to R20.53 to the pound.
The yen struck a new three-decade dollar low as a rise in US inflation expectations cemented expectations of more hefty Federal Reserve rate hikes.
Truss sacked finance minister Kwasi Kwarteng as pressure mounted on her government following last month's big-spending, tax-slashing mini-budget, which spooked markets.
The September 23 budget sent the pound tumbling to a record dollar low, near parity with the greenback, and bond yields surged before stabilizing thanks to interventions by the Bank of England.
Sterling sank more than one percent to under $1.12 after Truss dismissed Kwarteng.
It fell even lower after Truss appointed Jeremy Hunt as her new finance minister and announced a dramatic policy U-turn, before clawing back some of its losses.
In her first Downing Street press conference, Truss stated the "need to act now to reassure the markets," abandoned her plans to eliminate an increase in corporation tax and said spending would not increase as rapidly as planned.
"The soap opera that is UK politics continues to dominate FX (forex) markets Friday," said Stephen Innes, managing partner at SPI Asset Management.
UK 10-year government bond yields rose after the Bank of England publicly stated it would end its costly market interventions on Friday.
"Unfortunately for Truss, her swift ability to spook markets with a swathe of unfunded spending plans is now being followed by yet another rise in yields, as markets wonder whether we could soon see another push to replace her," said Joshua Mahony, senior market analyst at online trading platform IG.
London's FTSE 100 ended the day with an increase of 0.1 percent, having given up most of its earlier gains because Truss's U-turn left her position fragile.
Berenberg bank Senior Economist Kallum Pickering said "the policy U-turn is a major humiliation for Truss" and weakens her politically.
"It is not easy to see how Truss -- whose personal mandate is now in tatters - can continue as PM for long," he added.
While European markets ended higher, Wall Street failed to hold onto gains made on Thursday in a surprising rally despite data showing strong inflationary pressures in the United States.
After rising early on, US stocks resumed their downward spiral, with the S&P 500 losing 2.4 percent.
US retail sales in September were virtually unchanged from August at $684 billion, Commerce Department data showed in a report that revealed the drag on consumers from inflation.
Meanwhile, consumer sentiment data from the University of Michigan came in slightly better than expected, but the report cautioned of a "bumpy road ahead for consumers" due to uncertainty over inflation and the state of financial markets.
Third quarter earnings season got into full swing, with a number of large banks, including JPMorgan Chase and Citigroup, reporting lower earnings and setting aside more funds in preparation for a possible recession, although their performances topped analyst estimates.
14 October 16:17
Mondi very strong update. Turnover and net income up. Earnings before interest tax depreciation etc up 55%. Mondi has been looking cheap for a while— Wayne McCurrie (@WayneMcCurrie) October 14, 2022
14 October 14:08
Quantum Foods flags profit crash amid feed cost surge, avian flu outbreak
Poultry group Quantum Foods says its profits are expected to crash byalmost two thirds for its year to end-September, with SA's biggest egg producertaking a series of hits, including surging feed costs, an unprotected strike atits operations, an avian influenza outbreak, and weakening consumer demand.
Headline earnings per share are expected to be at least 63% lower to end-Septemberthan the prior year’s 52.2c, the firm said in an update, with further pressurecoming from load shedding and a strike at one of its facilities.
SA’s poultry producers have been hit with a surge in feed costs, withprices of cereals surging in the wake of Russia’s invasion of Ukraine, withboth countries major exporters of cereals, vegetable oils, as well asfertilizer. Feed costs typically make up much more than half of the cost of broiler.
The second half of the year also saw additional costs incurred in the eggbusiness to supply customers from the Western Cape with eggs produced in Gautengand the North West, the firm said.
The company’s Lemoenkloof farm in the Western Cape – typically 13% of egg production– had been hit by a highly pathogenic avian influenza outbreak, with the groupsaying previously this resulted in the culling of 110,000 hens.
The firm said on Friday its insurance was limited to the risk associatedwith direct losses and did not cover the effect of lower sales or lost production.An insurance payment of about R20 million has been received.
Quantum had also faced an unprotected strike at its Kaalfontein farm inGauteng towards the end of its 2021 year, which accounts for about 15% of eggproduction.The firm said earlier in 2022 that employees at the farm began to activelydisregard operating procedures, putting pressure on its ability manage its efficiencies,while employees then embarked on an unprotected strike after an employee who wassuspected of sabotage was charged.
The majority of the staff had been dismissed, forcing the firm to employtemporary labour at short notice, which along with a maintenance backlog,resulted in higher costs and weaker production efficiencies.
Shares of Quantum, which is valued at R880 million on the JSE, wereunchanged at R4.40 on Friday afternoon, having fallen more than a fifth overthe past year.
14 October 09:39
Mondi's profits jump as it cashes in on tight paper market, operational benefits
Paper and packaging group Mondi has flagged aprofit jump of more than half for its third quarter, benefiting from risingprices in a tight market, as well as operational benefits in terms of its ownenergy production.
Mondi, valued at R137.2 billion on the JSE, said onFriday underlying core profit from continuing operations, and excluding Russia,rose 55% to €450 million (R8 billion) in the three months to end September,with higher volumes and prices more than offsetting input cost pressure.
Mondi generates mostof its revenue in Europe, which is currently facing an energy crunch, althoughthis is putting disproportionate pressure on many of Mondi’s rivals. This is due to the firm producing the majority of its own energy needs internally through biomass sources,with only about 10% of its fuel needs coming from natural gas.
Mondi’spaper business in Russia has previously accounted for about a fifth of thegroup’s core profit, but it announced a €1.5 billion deal in August tosell most of its assets in the country. The firm said onFriday it was still awaiting approval from various Russian authorities, whichis required for the disposal to proceed.
This business is now considered adiscontinued operation and generated core profit of €129 million in thefirm’s third quarter.
“Whilesignificant geopolitical and macroeconomic uncertainties remain and weanticipate continued inflationary pressures on our cost base as we enter thefourth quarter, we are confident that the group will continue to demonstrateits resilience and deliver a year of good progress,” the packaging and paper firm said.
Mondi’sshares were up 1.89% at R288 in early trade on Friday, having fallen by morethan a quarter in the year to date.
14 October 07:27
Asian markets surge after sharp Wall St swing, pound holds gains
Asian equities soared Friday to extend a surge on Wall Street, where all three indexes saw extreme swings in response to a forecast-beating inflation report that cemented expectations for more big Federal Reserve rate hikes.
Sterling also held on to its big gains sparked by speculation the UK government was set to perform another u-turn on its controversial debt-fuelled mini-budget, though the yen remained stuck around three-decade lows against the dollar.
The hotly awaited US inflation report showed prices rose last month at a faster clip than expected despite a series of interest rate increases this year, which have fanned fears of a global recession.
The month-on-month reading came in double estimates, while core inflation -- which strips out volatile energy and food prices -- was also elevated.
The figures sparked a sharp plunge on Wall Street but the selling quickly reversed, and all three main indexes finished the day with gains of more than two percent with analysts suggesting several reasons for the extreme move.
Some said the initial selling may have been a knee-jerk reaction before traders accepted the data was not as bad as other recent reports, while technical factors were also flagged.
Others speculated that equities had finally reached their bottom after a year of selling that has seen many indexes plunge into correction territory having lost more than 20 percent from their recent peaks.
"The market reversal was a head-scratcher", said OANDA's Edward Moya. "Some investors are convinced core inflation will soon start trending lower. Fed tightening will remain aggressive at 75 basis points in November and possibly December," he added.
"Monetary policy is quickly getting restrictive and that will undoubtedly send inflation lower. It looks like rates will peak slightly above five percent and for some that is good enough of a reason to get back into stocks."
However, he warned that "given the path for rates is higher, this market reversal won't last long".
Still, Asian investors took the opportunity to buy up some bargains after another torrid week.
Tokyo, Hong Kong and Taipei put on more than three percent apiece, while Seoul was up more than two percent.
Shanghai, Sydney, Singapore, Wellington, Manila and Jakarta were also sharply higher.
The pound was also still enjoying some much-needed support after breaking higher Thursday on reports that the new government was looking at rowing back on more tax-cut pledges in its mini-budget, which sparked turmoil on debt markets when released two weeks ago.
Sterling was sitting well above $1.13, having been wallowing below $1.10 early Thursday, with help also coming from Bank of England cash injections to prop up financial markets and prevent a collapse of pension funds.
The pound's stronger position came despite Prime Minister Liz Truss's insistence that there would be no more u-turns, after she was previously forced to scrap a plan to cut the higher rate of income tax.
However, the strong inflation data pushed the already strong dollar further up against other currencies and it hit a 32-year high of 147.67 yen, with traders now looking to see if Japanese officials intervene again to protect the struggling unit.
Japanese finance minister Shunichi Suzuki told the Group of 20 gathering in Washington DC that authorities were "watching the foreign exchange markets with a high sense of urgency, and we'll take appropriate responses against excessive moves".
Officials refused to say if they intervened Thursday following a big drop in response to the greenback's spike.
The yen's weakness comes from the Bank of Japan's refusal to lift interest rates -- citing a need to support the economy -- at the same time as the Fed presses ahead with a series of big rate hikes.
13 October 17:00
Rand, stocks slump after red-hot US inflation data
Equities fell sharply on Thursday after data showed US inflation jumped more than expected in September.
The data solidified expectations of further interest rate hikes, helping push the dollar higher, including striking its highest level against the Japanese yen since 1990.
The rand was trading around R18.38/$ - its lowest level since May 2020. It weakened almost 4% against the pound, amid expectations that the UK will hike rates. Late on Thursday, it was trading at R20.62 to the pound and R17.86 for a euro
US consumer prices rose 0.4 percent in September compared to August, twice the 0.2 percent projected by analysts even as the annual increase in the consumer price index slowed slightly to 8.2 percent from 8.3 percent.
But core inflation, excluding volatile energy and food prices, climbed to 6.6 percent from 6.3 percent in August.
The US Federal Reserve has raised interest rates at an aggressive clip of 0.75 percentage points at its last three meetings, and signalled plans to continue doing so until rampant inflation is brought under control.
That has led to a slump in stock prices in recent months, as higher interest rates will reduce consumer spending power.
Last month saw a brief rally in stocks after data suggesting that the US economy was slowing, as investors hoped that it would allow a "pivot" by the Fed to a slower rate of interest rate hikes.
"The strong CPI only reinforces the view that there is no way the Federal Reserve can contemplate a 'pivot' this year," said Stephen Innes at SPI Asset Management.
Wall Street stocks plunged at the open, with the Dow falling 1.1 percent. The S&P 500 slumped 2.1 percent and the tech-heavy Nasdaq Composite 2.8 percent.
The JSE's All-Share index was down half a percent, with Harmony (-7%), AngloGold (-7%) and Prosus (-5%) among the biggest losers.
European stocks, which had drifted higher before the US inflation data, turned lower. Frankfurt shed 1.1 percent and Paris 1.6 percent.
The FTSE 100 in London was down 1.3 percent, with media speculating the government may cut back on its fiscal stimulus plans and and increase corporate taxes in its latest policy U-turn.
But the speculation sent the pound soaring 1.4 percent against the dollar. Meanwhile the UK government's 30-year bond yield eased to 4.63 percent and the 10-year fell to 4.31 percent.
The ten-year yield on Wednesday struck 4.64 percent, the highest since the 2008 global financial crisis and higher than the level that prompted the BoE's recent bond market intervention.
Oil prices fell after the US inflation data, which reinforced recession concerns and about sliding demand prospects.
The dollar rose as high as 147.67 yen, its highest level since 1990, as US and Japanese monetary policy increasingly diverge. The Bank of Japan has so far refused to raise interest rates, making yen investments less attractive than dollar investments.
"The Bank of Japan continues to keep monetary policy easy because inflation and wages remain relatively low" in Japan, said Carol Kong, and economist and currency strategist at Commonwealth Bank of Australia.
- AFP, with additional reporting by News24 Business
13 October 14:51
13 October 13:01
Rand sinks to weakest level since 2020, while yen tests 1998 low
The rand hit R18.38/$ on Thursday morning – its weakest level since April 2020 as the dollar rally continued. Later on Thursday, new US inflation data is expected to confirm more large interest rate hikes.
By lunchtime on Thursday, the rand recovered slightly to R18.27, but it continued to be sharply lower against the pound (R20.36) and the euro (R17.76).
The yen languished near a fresh 24-year low on Thursday, while sterling pared some overnight gains as investors nervously awaited an impending deadline for the end of the Bank of England's emergency bond-buying programme.
Investors also were on edge in Asia trade ahead of a key inflation reading in the US later in the day for possible clues on how much higher the Federal Reserve will push interest rates.
The yen hit a trough of 146.98 per dollar overnight and last traded at 146.87.
It is a whisker away from its August 1998 low of 147.64 per dollar, and well past last month's low of 145.90 per dollar which prompted Japanese authorities to intervene to buy the yen.
"It has lost its safe haven appeal," said Rodrigo Catril, a senior currency strategist at National Australia Bank.
"There's been this sense of cautiousness around that previous high (for dollar/yen) ... now they've punched through it, and therefore it feels like you have a little bit more room to keep going, because there hasn't been any intervention."
Sterling eased 0.13% to $1.10845, following a 1.25% rebound in the previous session after the Financial Times reported that the BoE had signalled privately to lenders that it was prepared to extend its emergency bond-buying programme beyond Friday's deadline if market conditions demanded it.
However, the central bank later reiterated that its programme of temporary gilt purchases will end on Oct. 14.
At the same time, Britain's new government said on Wednesday that it would not reverse its vast tax cuts or reduce public spending - a plan which has wreaked havoc in the country's financial markets.
UK pension schemes are racing to raise hundreds of billions of pounds to shore up derivatives positions before the BoE's Friday deadline.
Elsewhere, the euro gained 0.02% to $0.97035, while the antipodean currencies were nursing losses after having fallen to fresh multi-year lows earlier in the week.
The Aussie was up 0.02% at $0.6279, after sliding to a 2-1/2-year low of $0.62355 in the previous session.
The kiwi gained 0.10% to $0.5613, not far from its trough of $0.5536 hit on Tuesday, the lowest level since March 2020.
Core inflation in the U.S. is projected to rise 6.5% year-on-year in September. Overnight, data showed that U.S. producer prices increased more than expected last month.
The US dollar index firmed to 113.29.
"In some ways, the U.S. CPI is still looking back in the rearview mirror. You need to look at the component parts and see if there’s any interesting momentum that can be inferred," said Saktiandi Supaat, regional head of FX research and strategy at Maybank.
Minutes from the Federal Reserve's policy meeting last month showed that officials agreed they needed to raise interest rates to a more restrictive level - and then keep them there for some time - to meet their goal of lowering "broad-based and unacceptably high" inflation, even as the minutes contained a hint of a downshift in the pace of future monetary tightening.
- Reuters, with additional reporting by News24 Business
13 October 10:27
Ascendisshareholders approve R432m sale of pharma business to Austell
Shareholdersof Ascendis Health voted almost unanimously in favour of a R432 million sale ofthe firm’s pharma business to Austell Pharmaceuticals, one of two competingoffers they have spent months considering.
During ageneral meeting on Thursday 99.37% of shareholders voted against a R375million offer for the business from a consortium of Pharma Q and ImperialLogistics, originally announced in February. 99.56% then voted in favour of aR432 million offer from Austell Pharmaceuticals.
Austell, SA’slargest wholly black-owned pharmaceutical group, had stepped in as Ascendis’new lender in May, offering better terms than the previous lenders, and also then makingan offer for the pharma business, which hastherapeutic pharmaceutical brands for the treatment of diabetes and flu, amongother conditions.
Shareholder approval for the sale of the pharmabusiness is the last remaining condition for the transaction, and the Austelloffer had the backing of the Ascendis board, who had recommended against thealternative offer.
The sale, along with a R101.5 million rights issue inAugust, has put the company on the track of finally being debt free.The firm has been battling for years with a spirallingdebt load, racked up during an offshore acquisition spree in the mid 2000’s.
Outstanding debt has been reduced from R7.6 billion as of the end of June 2021 to R498 million at year end in June 2022, with the firmconcluding a debt-for-asset swap in December that saw it give up its profitableoffshore businesses.
In early trade on Thursday the firm’s shares were unchanged 72c, having lost about 96% over the past five years, and valuing the firm at R455 million on the JSE.
13 October 08:49
Karooooobooks record second quarter client additions, grows profits by a quarter
Karooooo,the holding company for vehicle recovery and fleetmanagement group Cartrack,registered a record growth in subscribersof over a third in its second quarter to end-August, helping to lift profits byover a quarter.
Profit rose 26% to R155 million in thethree months to end August and revenue 30% to R859 million, with the firmreporting that it continues to benefit from demand for its technology, particularlyfrom small and medium enterprises looking for more efficient fleet managementand logistics.
Karooooo, headquartered in Singapore,operates a software platform that provides real-time data analytics to customers,and is listed on the US Nasdaq, with an inward listing on the JSE.
"The hard work in establishing the brand in Southeast Asiacontinues to gather momentum where we are acquiring enterprise customers ofvarious sizes and industries," the firm said on Thursday. "In spite of trading conditions in South Africa remainingsluggish, we experienced strong demand in the quarter," it said.
At the end of August, the firm had 1.22 million subscribersin SA, up 12% year on year, while its total subscriber count stood at 1.6million, up 14%.
13 October 07:08
Asian markets drop as traders brace for key US inflation data
Equities fell in Asia and the dollar maintained its strength Thursday ahead of the release of crucial US inflation data that could determine the pace of Federal Reserve interest rate hikes.
The release of the September report comes a day after minutes from the central bank's latest policy meeting showed officials determined to win their battle against runaway prices by ramping up borrowing costs, though they did note the risk to the economy that posed.
Investors are growing increasingly worried that the strict monetary tightening campaign -- including three bumper rate hikes in succession -- will plunge the United States into recession.
While there are hopes for signs of a slowdown, traders have taken to the sidelines in case of more volatility.
On Wednesday, figures showed wholesale inflation rose a forecast-beating 0.4 percent.
After another day of losses on Wall Street, Asia was again in the red with traders in Hong Kong, Tokyo, Shanghai, Singapore, Seoul, Wellington, Taipei and Manila selling.
"The Fed needs data to start finding an off-ramp," Carol Schleif, of BMO Family Office, told Bloomberg Television.
"That's a tough market to be in. Until we get a bunch more data, markets will have to figure out how to find their footing."
Minutes from the Fed's September meeting suggested it will press on with a fourth straight 0.75 percentage-point hike next month, with policymakers noting a slowdown of growth and the jobs market would be "required" to tame inflation, adding that prices remained "unacceptably high".
They also pointed out that prices had "not yet responded" to the previous tightening.
Bank officials had for months stuck to a line that they will continue ramping up rates and hold them until they were satisfied they have slain inflation.
But the minutes said "several participants noted that, particularly in the current highly uncertain global economic and financial environment, it would be important to calibrate the pace of further policy tightening with the aim of mitigating the risk of significant adverse effects on the economic outlook".
However, they said the cost of not doing enough to tackle prices outweighed the cost of doing too much.
Dollar still king
"The Fed remains purposefully driven to tighten monetary policy further into restrictive territory given the rather gradual cooling of economic activity and slow inflation response," said Gregory Daco, at Ernst & Young.
But added that "the balance of risks is rapidly shifting"."Elevated global economic and financial market uncertainty will make it essential for the Fed to calibrate its policy response."
They expect to lift rates to around 4.6 percent in 2023, according to the median estimate -- from the current 3-3.25 percent.
Expectations for even more tightening kept the dollar elevated across the board, and it hit a fresh 24-year high near 147 yen, more than one yen above the point at which Japanese authorities last month intervened to protect the currency.
Still, sterling held most of the gains it enjoyed Wednesday fuelled by expectations the Bank of England will unveil a huge rate hike next month in the wake of volatility in UK financial markets.
The crisis in London saw the yield on 30-year government bonds bounce above five percent, while that on 10-year bonds hit 4.64 percent, the highest since 2008 in the midst of the global financial crisis.
The UK government's increased borrowing costs are a reflection of market unease regarding the affordability of upcoming tax cuts aimed at supporting Britain's recession-threatened economy.
Oil prices were broadly flat after another drop Wednesday following a report from the industry-funded American Petroleum Institute indicating a huge jump in US stockpiles, suggesting weakening demand.
Meanwhile, OPEC trimmed its estimate for growth in demand this year and next by half a million barrels a day.
A drop in the past few days has eaten into last week's gains that came in response to a decision by OPEC and other producers to slash output by two million barrels a day.
12 October 16:19
Rand hits weakest level in 28 months
The rand sank to its weakest level since May 2020 as thedollar rallied on renewed US rate-hike expectations. Meanwhile, market turmoilin the UK unnerved investors.
By Wednesday afternoon, the local currency was trading atR18.27/$. It also weakened against the pound (R20.18) and euro (R17.74).Earlier, it weakened to a level of R18.3035, which was last seen at the heightof the global pandemic hard lockdowns.
Gryphon Asset Management portfolio manager CasparusTreurnicht says the dollar surge is a sign of stress in the market, with hasbeen worsened by the turmoil in the UK bond and pensionfund market.
"Investors are looking for a safe haven. It’s clear thatsomething big is going on and we may only know the full extent of the reasonsfor the stress later."
The 20-year UK government bond yield surged to its highestlevel in 14 years at 5.141% on Wednesday after its central bank said it would on Friday end a short-term programme of bond-buying support aimed at quellingvolatility triggered by a debt-fuelled UK budget.
The UK government's higher borrowing costs reflect marketunease regarding the affordability of upcoming tax cuts aimed at supportingBritain's recession-threatened economy.The pound rose against the dollar as traders bet on moreaggressive interest rate hikes from the BoE on concerns that the budget ofuncosted tax cuts would further fuel sky-high UK inflation.
In addition, the dollar against most currencies after datashowed US producer prices increased more than expected in September, in anotherhot inflation reading that boosted bets of more jumbo-sized interest rate hikesby the Federal Reserve.
The US Labour Department's producer prices index rose 8.5%in the 12 months through September, slightly higher than an estimated 8.4%rise. The reading was still lower than an 8.7% increase in August.
"It's stubborn and some people are hoping that we hadpeak inflation and it's going to come down quickly," said Joe Saluzzi,partner at Themis Trading in Chatham, New Jersey."It is not going to be that way. That's what the Fedhas been looking at and that's why they're raising rates the way they are. Sothis will take time and this is not going to be a quick thing."
Persistent inflation has sparked worries about the Fed'saggressive monetary action tipping the world's largest economy into arecession. Money markets are pricing in a 92% chance of another 75-basis-pointhike in November.
Earlier on Wednesday, the yen hit its lowest level in 24years against the dollar, as Japan's central bank holds off from hiking its ownborrowing costs.
Investors are nervously looking ahead to Thursday's USinflation report, with observers warning that a strong reading could sparkanother rout on markets.Even if it showed inflation cooling from a four-decade high,analysts said the Fed would not likely take the single reading as a reason toslow down its rate hikes.
Treurnicht says the global rate-hikecycle certainly does not look to be cooling soon.
"Higher interest rates tocool global growth is causing this 'risk off' mentality and in turn the randlook less attractive due to a grey listing by the FATF [Financial Action Task Team], slowing inflows to South Africa."
In addition, commodity prices are also cooling, which willweigh on the rand, adds Treurnicht. In addition, commodity prices are also cooling, which willweigh on the rand, adds Treurnicht. Investors are struggling to find some solace as theynavigate a range of crises that threaten the global economy, from soaringprices and bumper interest rate hikes to the Ukraine war and China'sCovid-induced growth slowdown.
The gloom was summed up by the International Monetary Fund,which on Tuesday highlighted the risks of inflation and the conflict in Europeas it slashed its global growth forecast and warned: "For many people 2023will feel like a recession".
Later, US president Joe Biden admitted there was a chancethe country could suffer a "slight" recession.
- AFP,Reuters and News24 Business
12 October 16:05
— Nick Hedley (@nickhedley) October 12, 2022
South African insurer Santam's exposure to flood claims has increased steadily.
The floods in KwaZulu-Natal earlier this year were the biggest weather-related catastrophe insured loss in the country's history.
Graph below is adjusted for inflation. pic.twitter.com/FOLGnU2Yp9
12 October 16:04
Russian copper builds up in warehouses - sources
Significant volumes of unwanted Russian-origin copper have been deposited in London Metal Exchange approved warehouses in Germany, the Netherlands and Taiwan since the middle of September, two sources familiar with the matter said.
Western countries imposed sanctions on Russian banks and wealthy individuals connected to President Vladimir Putin after Russia invaded Ukraine, in what Moscow calls a "special military operation", but so far there are no restrictions on its metals.
Despite this, several industry sources have told Reuters that some consumers have been rejecting Russian copper, which is being delivered to warehouses connected to the LME, effectively a market of last resort for producers and consumers.
"Many consumers, not all, don't want Russian copper," one of the sources familiar with the matter said, adding: "Either they are self-sanctioning or their customers are saying they don't want Russian copper in their products".
Russia produced 920,000 tonnes of refined copper last year, about 3.5% of the world total, according to the U.S. Geological Survey. Copper is used in the power and construction industries.
Since Sept. 15, copper stocks in LME warehouses in Rotterdam
Reuters could not establish which companies own the copper which has been deposited in LME warehouses.
Overall, LME copper stocks are up more than 40% since Sept. 15 at 145,525 tonnes. The numbers are low compared with global refined production at 25 million tonnes this year, but the two sources said if the trend continues and most of the copper in LME warehouses is Russian, the exchange may have a problem.
The LME declined to comment.
The world's largest and oldest market for trading industrial metals last week launched a discussion paper on the possibility of banning Russian aluminium, nickel and copper from being traded and stored in its system.
"For most LME metals, the percentage of Russian compared to other jurisdiction metal has remained both stable, and relatively low," the LME said in the discussion paper.
"For copper, however, the percentage of Russian compared to non-Russian-metal has been high, peaking at over 80% in both May and August 2022," it added.
The LME said high levels of Russian metal in its network of warehouses "are not unprecedented". The historical high for copper was 95% in the third quarter of 2021, for aluminium it was 74% in late 2014 and for nickel it was 65% in early 2013.
The discussion paper published by the LME did not give an explanation for what happened when these peaks occurred.
Nornickel, one of Russia's largest copper producers, declined to comment. Ural Mining Metallurgical Company and Russian Copper Company, which also produce copper in Russia did not respond to requests for comment.
12 October 14:59
12 October 14:37
Ghana consumer inflation rises to new high of 37.2%
Consumer inflation in Ghana climbed to an annual 37.2% in September from 33.9% in August, the statistics service said on Wednesday, hitting a 21-year peak despite aggressive policy tightening.
The central bank has raised its lending rate by 10 percentage points since the start of the year in an attempt to hold back inflation and slow the cedi currency's rapid depreciation.
Prices of imported goods accelerated nearly 5% faster than domestic items and food prices saw the largest hikes.
Prices of drinking water rose 58.9%, and the category of housing, water, electricity, gas and other fuels rose 68.8%. Transport, which includes fuel, rose 46.8%.
The cedi has been Africa's worst performing currency since the beginning of the year, the World Bank said last week. It has lost around 40% of its value against the dollar in that time, Refinitiv Eikon data showed.
Net foreign reserves dwindled to around $2.7 billion in September from $6.1 billion in January, and the balance of payments deficit was just shy of $2.5 billion in the first half.
The government is in the early stages of negotiating a support package from the International Monetary Fund. The latest IMF mission to Ghana ended on Saturday.
12 October 11:27
Yields on U.S. investment-grade bonds have surged to new post-2009 highs, reaching 5.81% as of yesterday. The selloff in this debt has been so great, with yields tripling in the past two years, that it's starting to attract traditional investors in private credit & junk bonds. pic.twitter.com/yQ8pTIVlde— Lisa Abramowicz (@lisaabramowicz1) October 12, 2022
12 October 09:17
Zeder posts declines in headline earnings, profit
Agri-investment group Zeder posted a decline of 13.5 cents in headline earnings per share for its interim results for the six months to end August, from a previous gain of 31.4 cents.
Its profit before finance costs and taxation from continued operations decreased by 74.5%, from R51 million in the previous corresponding period to R13 million.
As at 31 August 2022, the group's net asset value per share was 269 cents, a decrease of 39.6% and 42.3% when compared to the 445 cents and 466.1 cents of the corresponding period last year and 28 February 2022, respectively.
This is mainly as a result of the unbundling of its 42.2% shareholding Kaap Agri investment in April, and the payment of a special dividend of 92.5 cents per share.
In addition, a further gross special dividend of 10 cents per share (totalling R154 million) was declared as part of the interim results for the six months to end August.
The group says its objective remains to maximise long-term wealth for its shareholders and the board continues to engage with third parties interested in its remaining portfolio investments like Zaad and Capespan.
"Zeder remains focused on growing its remaining investee companies. Our immediate focus will remain on ensuring that our existing companies position themselves competitively, maintain market shares and conserve balance sheets while continuously driving for operational and cash generation improvements," the group said in a statement.
12 October 08:31
UK economy unexpectedly shrinks in August
Britain's economy contracted in August after slender growth the previous month, with production and services output sliding, official data showed Wednesday.
Gross domestic product shrank by 0.3% in August after a downwardly-revised expansion of 0.1% in July, the Office for National Statistics said in a statement.
Britain's finance minister Kwasi Kwarteng said on Wednesday that the government's growth plan will address the challenges faced by the country, especially after this latest data.
"Our growth plan will address the challenges that we face with ambitious supply-side reforms and tax cuts, which will grow our economy, create more well-paid skilled jobs and in turn raise living standards for everyone," Kwarteng said in a statement.
- AFP, Reuters
12 October 07:15
Stocks dive, dollar rallies as dazed traders gird for inflation data
Asian stocks sank again Wednesday while the dollar held gains against the yen and sterling as the volatility that has characterised markets for most of the year showed no sign of letting up.
Angst-ridden investors are struggling to find some solace as they navigate a range of crises that threaten the global economy, from soaring prices and bumper interest rate hikes to the Ukraine war and China's Covid-induced growth slowdown.
The gloom was summed up by the International Monetary Fund, which on Tuesday highlighted the risks of inflation and the conflict in Europe as it slashed its global growth forecast and warned: "For many people 2023 will feel like a recession".
Later, US President Joe Biden admitted there was a chance the country could suffer a "slight" recession.
The latest blow came Tuesday when the Bank of England announced it would stop its emergency bond-buying efforts on Friday, ignoring calls to extend the programme to allow markets to stabilise.
Officials were forced last month to step into financial markets to prevent a collapse in pension funds caused by a spike in bond prices after a debt-fuelled, tax-cutting mini budget by new finance minister Kwasi Kwarteng sparked fears of a surge in borrowing.
The move quelled the crisis -- after the pound hit a record-low $1.0350 -- but traders were spooked by the prospect of more selling when the BoE removes its support.
Sterling, which had recovered to as high as $1.15 last week, came back under pressure to drop back below $1.10 Tuesday where it remained the next day in Asian business.
Risk assets buckled after the announcement, with all three main indexes on Wall Street turning lower Tuesday, having been in positive territory earlier.- Fresh volatility warning -Most of Asia followed suit.
Hong Kong led losses, shedding more than two percent, while Tokyo, Sydney, Shanghai, Singapore, Seoul, Wellington, Jakarta and Taipei were also down.
"And at least they did not allow the rug to get ripped from under pension funds," said SPI Asset Management's Stephen Innes.
"But stepping away as the buyer of last resort is not great for risk or sterling.
"At the end of the day, UK economic issues, fiscal irresponsibility, and a hawkish Fed will linger. So do not be surprised by a pickup in pound volatility and for a continued move lower as well."
Investors are now nervously looking ahead to Thursday's US inflation report, with observers warning that a strong reading could spark another rout.
The desire to find a safe place to invest also pushed the greenback to a new 24-year high against the yen, breaking the level touched last week when Tokyo stepped into the market to support the Japanese unit.
Investors will be keeping a close eye on developments in Japan, to see if there is another cash injection, though analysts said the yen could strengthen naturally.
"There is so much tension that duration time (above 146 yen) will be short," said Yoshio Iguchi, of Traders Securities.
"The chicken race will continue with people wanting to test the upside but at the same time scared of being countered by intervention."
And City Index's Matt Simpson added: "Traders are confident that the yen will weaken, despite comments from government officials that they are watching forex markets very closely.
"But the reality is that the (Bank of Japan) wants a weaker currency, and (is) happy to let it slide so long as its demise is not too volatile.
"As of yet we're yet to hear any comments from BoJ or (finance ministry) officials, but we suspect comments will surely follow -- not that they seem to care."
Recession fears and China's Covid-linked economic woes also dragged oil prices back down, having surged last week on an outsized OPEC output cut, with many warning that demand will plunge as people refrain from spending.
11 October 21:47
Nasdaq 100 Total Returns— Charlie Bilello (@charliebilello) October 11, 2022
2022 YTD: -34%
11 October 18:33
PIC increases shareholding in MultiChoice
MultiChoice says the Public Investment Corporation (PIC) has increased its shareholding in the company to 15%.
It is an increase from the 14.4% previously held by the investor.
The PIC invests on behalf of the public servants' pension funds and has over the years been slowly building up its stake in MultiChoice, the parent company of DStv.
There has been activity in MultiChoice shareholding in recent months, and the French entertainment company Canal + in September increased its stake in the firm from 20.1% to 26.26%.
MultiChoice shares on the JSE closed at R117.15, against a previous close of R115.43.
11 October 17:28
Equities, oil prices slide on recession fears
Stock markets and oil prices slumped Tuesday as investors grow increasingly fearful that more big interest rate hikes will tip economies into deep recessions.
The mood darkened also on the worsening Ukraine war and weaker demand expectations in China.
With the focus on inflation, analysts said US consumer price index data released later this week will be crucial to the direction of risk assets.
Another big reading could spark a fresh equity selloff and a surge in the dollar. The rand was trading at R18.09/$ on Tuesday evening, while the JSE's All-Share index ended the day 0.3% lower. Sanlam (-3%) was one of the biggest losers.
"There is growing pessimism in the markets now and with some big data points to come from the US this week, not to mention the start of earnings season," noted Craig Erlam, analyst at OANDA trading group.
"Investors should probably brace for more volatility."
Traders had hoped that bumper rate increases by the US Federal Reserve this year would begin to drag on the economy and slow runaway prices, allowing policymakers to reduce the pace of monetary tightening.
But a forecast-beating US jobs report on Friday highlighted the tough work the country's central bank has slowing inflation from four-decade highs, and many observers warn recession is virtually inevitable.
World Bank chief David Malpass said there was a "real danger" of a global contraction next year, adding that the surge in the dollar was weakening the developing nations' currencies and pushing their debt to "burdensome" levels.
And JP Morgan boss Jamie Dimon told CNBC that while the US economy was holding up, it faced several headwinds including rising rates, surging inflation, Fed tightening and the Ukraine war.
He added that he saw a US recession in six to nine months, and that the S&P 500 could fall another 20 percent.
Barings strategist Christopher Smart said: "It's little wonder investors enter the week in a dreary mood, especially with headlines from Ukraine signalling a further escalation in geopolitical tensions."
Chip manufacturers globally took a pounding from new US export controls aimed at restricting China's ability to buy and make high-end chips with military applications.
The Philadelphia Stock Exchange Semiconductor Index saw its lowest close since late 2020, while Bloomberg News reported that $240 billion had been slashed from companies' market values worldwide.
Taipei led the losses in Asia - diving more than four percent - as chip giant TSMC plunged 8.3 percent, while a hefty selloff in Samsung Electronics dragged Seoul down 1.6 percent. Tokyo was also sharply lower owing to a hit to tech firms.
11 October 11:22
BREAKING: UK unemployment rate falls to 3.5%, the lowest since 1974.— The Spectator Index (@spectatorindex) October 11, 2022
11 October 11:15
Sanlam wants to take control of Medscheme owner AfroCentric
Sanlam has made an offer to buy a controlling stake in black-owned JSE-listed investment group AfroCentric, which owns medical aid administrator Medscheme.
Sanlam wants to acquire at minimum 36.6%, or a maximum of 43.9% of AfroCentric shares from its shareholders at R6 per share (or shares in Sanlam). The maximum offer equates to at least R1.4 billion.
11 October 09:45
Asian chipmakers plunge after US unveils China export controls
Chipmakers plunged in Asian trade Tuesday over new US measures to limit China's access to high-end semiconductors with military uses, a move that wiped billions from companies' valuations worldwide.
The announcement on Friday marked the latest volley in a long-running standoff between the two superpowers that has seen them face off over a range of issues including technology, trade, Hong Kong, Taiwan and human rights.
The US Department of Commerce said the measures include export restrictions on some chips used in supercomputing, and toughen requirements on the sale of semiconductor equipment.
The decision hammered chip manufacturers, with the Philadelphia Stock Exchange Semiconductor Index seeing its lowest close since late 2020, while Bloomberg News reported that $240 billion had been slashed from companies' market values globally.
Taipei, Seoul and Tokyo markets were closed for holidays on Monday, and when trading resumed Tuesday, chipmakers sank.
Taipei-listed firms were among the worst hit with the Taiex stock index shedding more than four percent.
Taiwan Semiconductor Manufacturing Co. shed 8.3 percent and ASE Technology plunged nine percent, while United Microelectronics shed seven percent.
South Korean tech titan Samsung Electronics, a major semiconductor maker, fell more than one percent in Seoul where DB Hitek was off more than three percent.
And in Tokyo, Renesas Electronics shed almost six percent, with Tokyo Electron losing a similar amount.
The US measures are likely to complicate Beijing's push to further its own semiconductor industry and develop advanced military systems.
They came days ahead of a major Communist Party congress in China at which President Xi Jinping is expected to secure a historic third term.
The rules were also announced just days after the Pentagon added 13 more Chinese firms including drone manufacturer DJI and surveillance firm Zhejiang Dahua Technology to a blacklist of Chinese military-linked companies.
"With the latest measure, it would become difficult for China to manufacture and develop semiconductors because most semiconductor equipment is dominated by the US and its allies," said Chae Minsook, of Korea Investment & Securities.
"It is impossible to maintain the chip industry without adopting advanced equipment."
11 October 06:42
Markets swing on recession fears as inflation data looms
Most markets fluctuated in Asian trade Tuesday as traders grow increasingly fearful that more big interest rate hikes will tip economies into deep recessions, with the mood also darkened by the worsening Ukraine war and worries over China's outlook.
With the focus on inflation, analysts said consumer price index data released later this week will be crucial to the direction of risk assets -- another big reading could spark a fresh equity selloff and surge in the dollar.
Investors had hoped that a series of bumper rate increases by the US Federal Reserve this year would begin to drag on the economy and slow runaway prices, allowing policymakers to slow down their pace of monetary tightening.
But a forecast-beating jobs report on Friday highlighted the tough work the central bank has in bringing inflation down from four-decade highs, and many observers warn a recession is virtually inevitable.
World Bank chief David Malpass said there was a "real danger" of a global contraction next year, adding that the surge in the dollar was weakening the developing nations' currencies and pushing their debt to "burdensome" levels.
And JP Morgan boss Jamie Dimon told CNBC that while the US economy was holding up now, it faced several headwinds including rising rates, surging inflation, Fed tightening and the Ukraine war.
He added that he saw a US recession in six to nine months, and that the S&P 500 could fall another 20 percent.
Barings strategist Christopher Smart said: "It's little wonder investors enter the week in a dreary mood, especially with headlines from Ukraine signalling a further escalation in geopolitical tensions.
"Of course, markets are meant to look ahead, but it's hard not to see the next few quarters bringing more of the same."
After another round of losses in New York, Asia again struggled.
Tokyo shed more than two percent as traders returned from a long weekend to play catch-up with Monday's retreat, while Hong Kong was hit again by hefty selling in tech firms, dropping the Hang Seng Index below 17,000 points for the first time since late 2011.
Seoul was off more than two percent, while Taipei tanked as semiconductor firms including TSMC were hammered by new US export controls aimed at restricting China's ability to buy and make high-end chips with military applications. Jakarta was also down.
Still, bargain-buyers helped push gains in Shanghai, Singapore, Wellington and Manila. Sydney was flat.
There was a glimmer of optimism for investors in comments from Fed vice chair Lael Brainard, who appeared to hint at a more cautious tone for policy as the hikes already announced work through the economy.
But SPI Asset Management's Stephen Innes said traders were likely to be guarded in their reaction to the remarks."With the market in 'fool me once, shame on me, fool me twice, shame on you' mode, investors should be 100 percent defensive, erring to classical risk-off strategies as local conversations defer to risk-off," he said in a commentary.
On currency markets, the dollar remained king as the United States lead the monetary tightening drive, and eyes are on the reaction in Tokyo as the yen drops towards the 145.90 level that last month saw massive government intervention.
10 October 10:26
Former RMB CEO appointed to Pick n Pay's board
Former RMBCEO James Formby has been appointed as an independent non-executive director ofPick n Pay.
TheJSE-listed retailer said in a statement the appointment of Formby, who is achartered accountant, was effective from Monday.
Formby recently steppeddown as CEO after seven years at the helm.
Pick n Pay said Formby had a 25-yearcareer with the FirstRand Group, of which RMB is a division. It saidFormby joined RMB in 1997 as a "corporate finance transaction" and held a numberof senior positions during his career, including head of corporate finance,deputy head of the investment banking division and head of coverage beforebeing appointed RMB COE in September 2015.
Pick n Pay said it looked forward to the "valuable contribution that James will make tothe board, given his strong commercial skills and the diversity of hisprofessional experience".
10 October 06:43
Markets sink as US jobs data fans rate hike bets
Asian markets sank Monday as forecast-beating US jobs data fanned expectations for another big Federal Reserve interest rate hike, while traders are now focusing on an upcoming inflation report.
A brief rally across trading floors last week gave way to gloom as investors grow increasingly worried that central bank efforts to tame runaway prices will plunge the global economy into recession.
Adding to the stress is the upcoming corporate earnings season, which many fear will show that companies are feeling the pain of tightening monetary policies.
All three main indexes tumbled Friday -- with the Nasdaq off almost four percent -- following news that a net 263,000 US jobs were created in September.
While that was down from August it was more than expected and showed that the labour market remained robust and highlighted the tough job Fed officials face in their battle against four-decade-high inflation.
With the spotlight on a consumer price index reading later in the week, policymakers continue to take a hawkish tone, warning they will not ease up on their rate hikes even if that means causing a recession.
"The real question for the market is whether one step down in core CPI will be enough to change the tone around inflation," said SPI Asset Management's Stephen Innes.
"Given the sharp increase in cross-asset correlations and breakdown in risk assets, it seems like that would be too much to hope for."
Asia tracked the US losses, with Hong Kong down more than two percent, while there was also hefty selling in Sydney, Singapore, Manila, Jakarta and Wellington.
Shanghai dropped as traders returned from a weeklong holiday, with rising Covid numbers in the country leading to worries of more economically painful lockdowns ahead of a key Communist Party gathering.
Tokyo, Seoul and Taipei were closed.
Innes added that there was also nervousness about earnings."Unlike June, where earnings were poised to beat expectations, investors are biased towards hitting the sell button as concern around lagged effects of tightening hitting bottom lines now permeate expectations," he said in a note.
The prospect of higher US borrowing costs sent the dollar rallying Friday and it held most of those gains in early Asian trade.
Investors are keeping an eye on the yen, which is edging back to the lows touched last month when the government stepped in with a massive cash injection to support the currency.
Oil prices edged down after seeing their biggest weekly gain since March in reaction to a decision by OPEC and other major producers led by Russia to cut output by two million barrels a day.
The drop Monday came on demand concerns caused by China's Covid flare-ups and more weak data out of Beijing caused by recent lockdowns.
"A slew of weak macroeconomic data that China has released shows that there is very limited room for an economic rebound in the short term, which is hard to provide support for earnings and market confidence," Shen Meng, at investment bank Chanson & Co in Beijing, said.
07 October 06:49
Asian stocks drop, dollar holds rally as US jobs report looms
Asian markets fell and the dollar held an advance as the optimism that coursed through trading floors earlier this week gave way to nervousness ahead of a massive US jobs report later Friday that could determine Federal Reserve rate hike plans.
Soft economic data out of Washington sent equities surging at the start of the week and dragged the greenback on hopes that the readings could allow the US central bank to pivot and slow down its strict monetary tightening programme.
However, the uncertainty that has characterised the year so far has slowly returned and Wall Street's three main indexes ended Thursday with fresh losses, with sights firmly on the non-farm payrolls (NFP) figures.
Analysts expect the monthly report to show 250,000 posts were created in September, which would be the weakest since late 2020 but still a healthy figure suggesting a strong labour market.
There is a fear that a result higher than expectations could spark another sell-off across risk markets as investors bet on more bumper rate hikes.
Fed officials have consistently warned that they are determined to ramp up borrowing costs to fight four-decade-high inflation, even at the expense of a recession -- feeding worries among traders that the world economy is heading for such a scenario.
"The pivot party gang dialled down their new-found enthusiasm overnight after hawkish central bankers expressed concerns over sticky inflation," said SPI Asset Management's Stephen Innes.
He pointed out that other central banks, including in Europe and Canada, had also flagged further tough measures.
Still, OANDA's Edward Moya added that a consumer price index report next week was also coming on traders' radars.
"Economists are not expecting a significant drop in pricing pressures, but many traders think that a cool report could happen and that will force the Fed to change their tune next week," he said in a note.
"Fed messaging has been consistent and it will likely stay that way post-NFP. Rate hike and cut bets will likely have significant swings after next Thursday's inflation report."
Asian markets extended the New York retreat, with downbeat earnings from chipmakers -- and a warning from South Korean titan Samsung -- raising worries about the upcoming corporate earnings season.
Tokyo, Hong Kong, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta were all in negative territory.
Adding to the unease was a warning from US President Joe Biden that the world faced nuclear "Armageddon" for the first time since the 1962 Cuban missile crisis and that he is trying to find Russian counterpart Vladimir Putin's "off-ramp".
He told a Democratic Party fundraiser in New York that Putin was "not joking" when he threatened to use nuclear weapons as his army faces a series of defeats in eastern Ukraine following his invasion in February.
The risk-off mood saw the dollar bounce Thursday after days of losses caused by traders lowering their rate expectations, and it held the advance in early Asian business.
The standout was sterling, which remained wedged below $1.12 and continued a rollercoaster that saw it hit a record low last week before recovering thanks to a Bank of England lifeline.
However, observers warned of more volatility in the pound as the government presses ahead with a debt-funded tax-cutting mini-budget, while the promised support from the BoE is due to end soon.
Oil prices edged down but are set for their biggest weekly gain since March after OPEC and other major producers led by Russia agreed to slash output by two million barrels, leading some analysts to predict a return to $100 a barrel by the end of the year.
06 October 11:43
Shell shares slide on hit to refining profit
Shares in energy giant Shell slid Thursday after revealing that third-quarter profit would be hit by a slump in refining margins.
The British group's stock lost 3.9 percent to around 23 ($26) as it forecast a hit of up to $1.4 billion in the three months to the end of September compared with the second quarter.
"Shell enjoyed record profits in the first and second quarter spurred by a surge in underlying oil and gas prices following Russia's invasion of Ukraine," noted Victoria Scholar, head of investment at Interactive Investor."However, since June, oil has posted four consecutive months of declines, with Brent crude down by around 25 percent."
Scholar said Shell was "grappling with a dysfunctional and volatile gas market as well as expectations of softening oil demand, particularly from China as the global economy cools".Shell, one of the biggest companies on London's benchmark FTSE 100 index, publishes full third-quarter results on October 27.
The FTSE was flat in morning deals Thursday.
06 October 10:05
Pan African completes R50macquisition of Mintails
Mid-tier miner Pan AfricanResources has completed the R50 million acquisition of the liquidated assets ofMintails Mining SA, a transaction that is expected to be transformative for the firm and could boost its gold output by a quarter.
Pan African, valued at R7.67billion on the JSE, has now acquired the total shares and claims of Mogale Goldand Mintails SA Soweto Cluster, both fully owned by Mintails SA, which wasplaced into provisional liquidation in 2018.
Pan African’s gold productionhit a record 205688 ounces in its year to end-June, and it is eyeinganother 50000 from a project related to its new assets.
After recently completed adefinitive feasibility study on the Mogale Gold tailings storage facilities,near Krugersdorp, Pan African estimates that construction will begin inApril 2023, and commissioning of the plant from between July 2024 and Decemberof that year.
“Pan African is pleased to have finally closed the sale transaction," CEO Cobus Loots said in a statement. "Our studies have demonstrated robust operational and financial economics, with the project having the potential to further increase our high-margin, long-life production from tailings retreatment operations.
"The area where Mintails is situated presents a number of environmental and social challenges. We will require the assistance of the government and all the other legitimate stakeholders to successfully address those challenges, remediate the site and develop a world-class project."
While the unfunded environmental liability of the mine has been estimated to be more than R460 million, Pan African told News24 in September this could be closer to R100 million.The Mintails North Sands mine dump near Krugersdorp is where, in July, eight women were gang-raped, allegedly by a group of illegal miners.
Pan African's shares were up 1.16% to R3.49 in early trade on Thursday, down about 3% in the year to date, but still up almost 12% on a one-year basis.
06 October 07:45
Global rally runs out of juice, rand firmer
Asian markets were mixed Thursday as this week's global rally ran out of juice, with concerns about a huge oil output cut's impact on inflation tempering hopes that central banks could soon ease back on their rate hike campaigns.
The mood on trading floors has been a little lighter this week, sending equities surging and weighing on the dollar, after weak readings on US factory activity and job openings feeding speculation that the Federal Reserve's strict tightening drive was having an effect.
But the confidence took a knock Wednesday from a better-than-expected read on private jobs hiring and a report showing the key services sector holding up more than expected.
The figures highlighted the resilience of the US economy in the face of multiple rate hikes and point to the long road ahead for the Fed in fighting decades-high inflation.
Fed officials have lined up for weeks to insist that they will not budge from lifting borrowing costs until prices are tempered - even at the cost of a recession - while some have warned traders not to expect any cuts next year.
"After an increase in expectations of an imminent Fed pivot given the softer than expected US (factory data), the strength in the services (sector) not only eases concerns of an imminent US recession, it also refutes any notion that the Fed will look to take its foot off the tighten pedal any time soon," said National Australia Bank's Rodrigo Catril.
The latest US data came as OPEC and other major producers led by Russia had decided to slash output by a massive two million barrels a day -- the biggest reduction since the pandemic struck.
Moscow said a possible price cap by the European Union on Russian crude would have a "detrimental effect" on the global oil sector, saying Moscow would not sell to countries that introduced it.
The news gave already elevated oil prices another leg up, with both contracts piling on more than one percent, and fuelling concerns that energy costs -- a major driver of the spike in global inflation since Russia's Ukraine invasion -- will drive higher again.
"All the developments we have seen on the supply side at this point very much sets the stage for what we believe will be higher prices into the end of this year," Damien Courvalin, at Goldman Sachs, told Bloomberg Television.
"With this cut and the winter seasonal demand, inventories will continue to fall."
All three main indexes on Wall Street ended in the red, though they managed to claw back most of their earlier losses thanks to a late rally.
The JSE's All-Share index fell almost a percent, but on Thursday morning the rand was trading at around R17.70/$ - its strongest level in almost two weeks.
Tokyo, Singapore, Seoul, Taipei and Jakarta all rose again, but Hong Kong retreated after blasting almost six percent higher Wednesday. Sydney, Wellington and Manila were also slightly lower.
But commentators remained on guard over the outlook, with eyes now on the release of US non-farm payroll jobs on Friday, warning that an above-forecast reading could spark another major selloff.
On currency markets the dollar, which bounced Wednesday after suffering a sell-off for most of the week, was slightly down again in Asian business.
Even sterling managed to resume its gains despite news that Fitch had lowered the outlook for British debt from stable to negative after the government of new Prime Minister Liz Truss announced a mini-budget packed with debt-fueled tax cuts.
The pound plunged more than two percent earlier as Truss failed to reassure investors with a speech at her Conservative party conference where she insisted she would stick to her fiscal plan.
05 October 18:22
OPEC and its allies are slashing #oil production by 2 million barrels a day. The Biden administration strongly lobbied OPEC to continue oil production at current levels or higher, because the move is expected to worsen #inflation worldwide. Brent oil gains 1.5%, WTI +1.3%. pic.twitter.com/uNP0E4G2k5— Holger Zschaepitz (@Schuldensuehner) October 5, 2022
05 October 17:46
Oil price jumps after OPEC's biggest output cut since 2020
OPEC and its Russia-led allies agreed on a major cut in oil production on Wednesday, a move to prop up prices that could bolster sanction-hit Moscow's coffers and irk Washington.
The 13-nation OPEC cartel and its 10 Russian-led allies agreed to reduce two million barrels per day from November at a meeting in Vienna, said Iran's OPEC Governor Amir Hossein Zamaninia.
It is the biggest cut since the height of the Covid pandemic in 2020.
Such a move could turbocharge crude prices, further aggravating inflation which has reached decades-high levels in many countries and is contributing to a global economic slowdown. Brent crude oil was up almost 2% to $93 following the decision on Wednesday.
It could also give Russia a boost ahead of a European Union ban on most of its crude exports later this year and a bid by the Group of Seven wealthy democracies to cap the country's oil prices.
US President Joe Biden personally appealed to Saudi leaders in July to boost production in order to tame prices which soared following Russia's invasion of Ukraine earlier this year.
But crude price have fallen in recent months on concerns over dwindling demand and fears over a possible global recession.
"With consumers only just breathing a sigh of relief after being forced to pay record prices at the pump, today's cut is not going to go down well," said Craig Erlam, an analyst at trading platform OANDA, ahead of the meeting.
When asked how the United States would react to a cut, the energy minister of the United Arab Emirates, Suhail al-Mazrouei, insisted that OPEC was merely a "technical organisation".
Alexander Novak, the Russian deputy prime minister in charge of energy who is under US sanctions, remained mum as he arrived for the group's first in-person meeting at its Vienna headquarters since March 2020.
Collectively known as OPEC+, the alliance drastically slashed output by almost 10 million barrels per day (bpd) in April 2020 to reverse a massive drop in crude prices caused by Covid lockdowns.
OPEC+ began to raise production last year after the market improved. Output returned to pre-pandemic levels this year, but only on paper as some members have struggled to meet their quotas.
The group agreed last month on a small, symbolic cut of 100,000 bpd from October, the first in more than a year.
Consumer countries had pushed for months for OPEC+ to open taps more widely to bring down prices, but the group ignored them again.
"Knowing that Russia is willing to cut output, the move could also be perceived as another escalation of the geopolitical tensions" between Moscow and the West, said Ipek Ozkardeskaya, a Swissquote bank analyst.
Biden made a controversial trip to Saudi Arabia in July in part to convince the kingdom to loosen the production taps. The trip saw Biden meet Crown Prince Mohammed bin Salman despite his promise to make Riyadh a "pariah" following the 2018 killing of journalist Jamal Khashoggi.
The OPEC+ decision comes ahead of a midterm congressional elections in the United States next month, and a surge in prices for Americans at fuel stations would not help Biden's cause.
White House press secretary Karine Jean-Pierre said on Tuesday that "we will continue to take steps to protect American consumers", declining to comment on the OPEC discussions directly.
While the cut will not be welcomed by the United States, several OPEC+ nations have struggled to meet their quotas in the first place.
Prices soared close to $140 per barrel in the aftermath of Russia's invasion of Ukraine in late February but fell as low as below $90 more recently.
05 October 11:01
Ascendis Health gets competition nod for Austell transaction
Ascendis Health says competition authorities have given approval for a R432 million offer for its pharma business by Austell Pharmaceuticals without conditions.
Shareholders of the firm are set to vote on two separate offers for the business on October 13, with the other a R375 million offer from Pharma-Q and Imperial Logistics, which already had competition approval.
The pharma business owns brands in the cough and cold, pain, diabetes, gastrointestinal tract and niche generic therapeutic segments, with the sale, along with R101.5 million in proceeds from a rights offer, expected to help solve the group's debt problems. The board of Ascendis, which had net debt of R481.7 million to end-June, backs the Austell offer, and the firm has indicated that it wasn't aware of any substantial shareholder that opposes it.
The firm's shares were unchanged at 75c on Wednesday morning, having fallen almost 11% so far in 2022, and by more than 96% over the past five years.
05 October 08:32
Massmart moves to shutter 14 stores inEast and West Africa
Walmart-owned Massmart says ithas failed to find buyers for 14 Game stores in East and West Africa, and is starting talks with staff due to their possible closure.
The retailer, which had initiated a 12-monthprocess to investigate a sale to local investors with a more intimateunderstanding of local market conditions, said on Wednesday that "unfortunately, this initiative did not deliver a meaningful outcome.”
Massmart, the owner of Game, Makro and Builders, has 403 retail and wholesalestores in 13 sub-Saharan countries, but it generates more than 90% of itsrevenue in South Africa.
The move comes amid a R6.4 billion offer from Walmart to buy outminority shareholders and delist the firm from the JSE.
Walmart bought control of Massmart in 2010,which proved to be a disastrous deal. The value of its investment has slumpedby 80% since then, as the retailer struggled in a weak economy characterised bytough competition, also taking hits such as from civil unrest and flooding.
In its half-year to 26 June, the company reporteda headline loss of more than R903 million for its continuing operations, from aloss of R359 million in the same period last year. Sales grew almost 2% toR38.1 billion.
05 October 07:53
Equities extend rally on rate hopes, traders await OPEC decision
Asian investors joined their Wall Street and European counterparts in an equity buying spree Wednesday as more data pointing to weakness in the US economy further fanned hopes the Federal Reserve could temper its rate hike campaign.
The much-needed dose of optimism has also put pressure on the dollar, pushing it down against most of its peers and adding to the upward march in oil prices fuelled by expectations OPEC will announce a massive output cut later in the day.
The mood on trading floors was lightened Monday by data showing US factory activity slowed more than forecast in September to a two-year low, suggesting the Fed's rate hike campaign against decades-high inflation could be kicking in.
That was followed Tuesday by news that US job openings had also dropped by almost 10% in August, its fastest fall since April 2020.
"Rate hikes are really beginning to take a bite out of the US employment numbers," said Matt Simpson, of City Index. He added that the figures put more emphasis on jobs reports out later in the week, with weak readings likely to provide more support to stocks as investors bet the Fed will temper its tightening campaign.
However, officials at the central bank continue to flag their determination to crush inflation, even if that means sparking a recession.
"For the market to continue higher, the jobs data will have to be in-line with, or short of expectations," said Lindsey Bell, of Ally Financial. The market is currently anticipating a "Goldilocks" labour market report that's "not too hot and not too cold".
All three main indexes on Wall Street rallied Tuesday, with the S&P 500 and Nasdaq up more than 3%, while European markets also thundered higher. And Asia continued the run, with Hong Kong rocketing more than 5% as investors there returned from a one-day break, while there were also healthy performances in Tokyo, Singapore, Sydney, Taipei, Jakarta and Manila.
The gains were also helped by a smaller-than-expected rate hike by the Reserve Bank of Australia. That came after the Bank of England last week pledged to pump billions of dollars into supporting financial markets after they were hammered by the UK government's big-borrowing mini-budget.
The BoE pivot "seems to have convinced investors that the Fed now must give more weight to financial stability, which means that the current monetary tightening cycle might end sooner rather than later", Ed Yardeni, president of Yardeni Research, said.
Focus is now on the meeting later Wednesday of OPEC and other major producers, who are reportedly considering a two million barrels cut in output -- double what had earlier been flagged -- after prices plunged to their January lows owing to recession concerns.
Both main contracts have bounced this week on talk of the reductions, while the weaker dollar makes the commodity cheaper for buyers using other currencies. While WTI and Brent dipped slightly, analysts said they may have more road to run up as supplies tighten and the dollar softens.
- AFP with Bloomberg
04 October 16:52
Emira's takeover offer of Transcend gets thumbsdown from Deloitte
Emira Property Fund's takeover offer of Transcend Property Fundhas been determined as "unfair and unreasonable" by independentexpert Deloitte, with the firm's independent board unanimously in favour ofshareholders rejecting it.
In July, Emira, which held almost 41% of Transcend, pitchedaR5.38 per share offer that represented a 17% premium to that paid duringa capital raise in December 2021, when many legacy shareholders declined totake up the offer, and Emira was required to subscribe an amount for an amountgreater than its proportionate share.
Emira had also cited Transcend's highdebt levels as motive for its offer, with a loan-to-value of 44.9%, whichconstrained that firm's ability to add new residential assets.
Deloitte, however, determined thefair value of a share liesbetween R6 and R6.60, with a likely value of R6.30.
Transcend is a specialist Reit with a residential-only propertyportfolio valued at R2.39 billion at the end of June. It listed on the AltX in2016, and migrated to the main board of the JSE in 2020.
Emira’s directly held South African portfolio was valued at R9.8billion at the end of June, comprising 74 properties across the retail, office,industrial and residential sectors. Just under a fifth of the group's totalasset base is international, made up of grocery-anchored convenience shoppingcentres in the US.
Transcend's shares were up 2% at R6.39 in late afternoon tradeon Tuesday, while Emira had added 1.6% to R10.53.
04 October 14:49
Capitec getslife insurer licence
Capitec has been granted a licence to providelife insurance, allowing the bank to gradually replace the current cell captiveinsurers that are underwriting its credit life and funeral policies.
The currentarrangement allows Capitec to offer life and funeral products to its retail bankclients, with cell captive essentially referring to a separate vehicle. Capitec is the owner of the cells, which are underwritten by a licensed insurer.
Capitec has agreements with two companies -Centriq Life Insurance and Guardrisk Life - which undertake the professionalinsurance management of the cell, including underwriting, reinsurance, claimsmanagement, actuarial and statistical analysis, investment and accountingservices.
Capitec saidon Tuesday strong growth in its number of insured clients, as well as proposedchanges to third-party cell captive regulations, had prompted its application,which was approved by the Prudential Authority on 3 October.
The licencehas been granted to Capitec Life, a wholly owned subsidiary of the bank.
In the half-year to end-August, Capitec reported that its net credit life insurance and funeral plan income grew by 64% to R1.5billion, driven by policy growth and a reduction in claims. Active policies in the funeral plan line had risen by a third to 2 million, covering 8.9 million South Africans.
At the end of July 2020, theFinancial Sector Conduct Authority (FSCA) had published a draft conductstandard that will regulate cell captive insurers operating cell structures,aimed at addressing perceived market conduct risks, including potentialstructural conflicts of interest.
According to ENSafrica, ifrealised in its draft form, there was no doubt cell captive insurers would haveto bear greater regulatory responsibility for the operations of the structures.
"While there can be noprincipled objection to such change, it does create a number of practicalissues which cell captive insurers will have to address on a day-to-day basis,in addition to re-working their contractual arrangements to ensure that theycomply with the new regulatory framework," the law firm had said in 2020.
In afternoon trade on Tuesday, Capitec’sshares were up almost 5% to R ,630.39, having lost almost a quarter of their valuein the past month. Standard Bank was up 1.48% and FirstRand 1.68%, having bothlost about 6% over the past month. Capitec has been under pressure recently asinvestors have pared back their expectations for the bank’s 2023 earningsgrowth amid rising interest rates and deteriorating global economic conditions.
04 October 10:47
— Corlys Velaryon The Sea Snake???? (@DividendPapi) October 4, 2022
Major indices on Wall Street all rose over 2% after a manufacturing gauge declined more than expected.
I hope for more bad news in the last few weeks of 2022 if it means the market rallies.
The JSE is also up over 2% with every single Top40 stock in the green. pic.twitter.com/ewOfAf3kBa
04 October 09:35
Oceana sells cold storage business to consortium
Oceana,owner of the Lucky Star canned fish brand, is selling its cold storagebusiness as the JSE-listed company looking to focus more on its global fishingbusiness.
Thebusiness, CCS Logistics, is a wholly owned-subsidiary of Oceana. It providestemperature-controlled storage and handling services of “mainly perishableproducts on behalf of major manufacturers, exporters and importers”.
CCLogistics, which has facilities that offer about 100 000 storage pallets acrossSA and Namibia, has been considered non-core to Oceana for some time. Oceana saidthe sale for R760m would allow it to “allocate capital to opportunities morealigned to its strategic objectives and core strengths in the global fishprotein sector”.
Oceana saidthe purchaser was a special purpose vehicle owned by a consortium consisting ofOld Mutual, acting on behalf of the InfrastructuralDevelopmental and Environmental Assets (IDEAS Fund) and the AfricaInfrastructure Investment Fund 4 Partnership (AII4). The twofunds are managed by African Infrastructure Investment Managers, BautaLogistics and Mokobela Shakati.
04 October 07:08
Australia's dollar slides after small rate hike, rand firmer
Australia's dollar tumbled on Tuesday after the nation's central bank surprised markets by opting to raise rates by a smaller-than-expected quarter point.
The Reserve Bank of Australia said it decided to slow the pace of tightening because the cash rate had been increased substantially in a short period of time, but left the door open to additional hikes.
The Aussie slumped as much as 0.97% before last trading 0.47% weaker at $0.6484.
"Obviously the RBA hasn't been persuaded by what other central banks are doing, which does make the comment that they don't have any concerns about the exchange rate down here," said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.
Heading into the RBA's decision, the currency had been tracking a little below the top end of its range since Sept. 23 at $0.6537. It sank to a 2-1/2-year low of $0.63635 last week.
The rand was almost a percent firmer at R17.82/$ on Monday morning.
Elsewhere, sterling was little changed at $1.13175 after earlier reaching $1.13435, the highest level since Sept. 22, the day before the new government roiled markets with its mini-budget of massive tax cuts funded by expanded borrowing.
British Prime Minister Liz Truss was forced to back down from the plan on Monday amid a party rebellion.
The euro also hovered close to the highest since Sept. 22, last changing hands 0.15% stronger at $0.9838.
The U.S. dollar lost some support from a slide in Treasury yields overnight after local economic data showed a slowdown in manufacturing, hinting that aggressive Federal Reserve rate hikes are already being felt.
The dollar index, which measures the currency against six peers including sterling and the euro, was about flat at 111.55, not far from Monday's low of 111.46, a level last seen on Sept. 23. It had soared to a two-decade high of 114.78 last Wednesday.
On Monday, the Institute for Supply Management's (ISM) survey showed U.S. manufacturing activity was the slowest in nearly 2-1/2 years in September as new orders contracted, with a measure of inflation at the factory gate decelerating for a sixth consecutive month.
Commonwealth Bank of Australia, though, predicts sterling's respite will be short-lived, and that the dollar rally has further to run.
Over the coming month, "USD can remain elevated as the FOMC (Federal Open Markets Committee) continues to hike aggressively and (the) global economy enters recession," CBA strategist Joseph Capurso wrote in a client note.
He also noted "global recession risks can push GBP down significantly" and "the weak UK economic outlook will keep GBP under pressure" over the medium-term.
The greenback was 0.14% stronger at 144.77 yen, keeping below 145 after briefly popping above that level on Monday for the first time since Japanese authorities intervened to support their currency on Sept. 22.
Japanese finance minister Shunichi Suzuki repeated on Monday that authorities stand ready for "decisive" steps in the foreign exchange market if "sharp and one-sided" yen moves persist.
New Zealand's kiwi was little changed at $0.5716, still close to the top of its range since Sept. 26. The Reserve Bank of New Zealand decides policy on Wednesday, and the market is fully priced for a half-point bump, while giving 29% odds on a 75 basis-point increase.
03 October 16:58
Investec lifts almost 5% after announcing R1.2bn share buyback
Shares of financial services group Investec rose about 4% on Monday, after it said it planned to spend R1.2 billion buying back its own shares.
Investec Limited, the holding company for the majority of the group's southern African holdings, will buy back shares in Investec PLC, which has a primary listing in the UK and houses the majority of the firm's non-SA operations. The firm has been operating with surplus capital in its South African operations, saying on Monday the buyback was part of its capital optimisation strategy.
Investec Plc has just under 700 million shares in issue, and had a market value of R50.38 billion on Monday afternoon, when its shares had risen 4.79% to R75.84. At current prices, the announcement implies Investec could buy back about 2.2% of Investec Plc's issued share capital.
03 October 13:15
Motus completes R3.64bn acquisition of Motor Parts Direct in the UK
Automotive group Motus says it has completed its£182 million (R3.64 billion) acquisition of Motor Parts Direct in the UK, a move aimed at reducing its dependency on vehicle sales.
Motor Parts Direct, started in 1999, focuses on supplying motor vehicle parts, primarily to the passenger and light commercial vehicle sector, to workshops in and around the UK. The group has 175 branches in the UK and Wales, and a wide customer base of more than 14 000 active customers, employing 1 700 staff.
Motus, valued at R20.44 billion on the JSE, primarily operates in South Africa, where it has almost a quarter of the passenger vehicle market and 365 dealerships. The firm also operated in the UK, with 114 dealerships as of the end of June, as well as in Australia, where it had 36 dealerships.
The group's shares were up 1.42% to R116.42 in early afternoon trade on Monday, having risen 7.42% in the year to date.
03 October 12:44
03 October 11:03
03 October 10:54
Credit Suisse slumps amid investor concern about its liquidity
Shares in Credit Suisse fell by about 10% in early trading, reflecting market concern about the Swiss bank as it finalises a restructuring due to be announced on Oct. 27.
Credit Suisse has solid capital and liquidity, Chief Executive Ulrich Koerner told staff in a memo last week.
Executives at the bank spent the weekend reassuring large clients, counterparties and investors about its liquidity and capital position, the Financial Times reported on Sunday.
A spokesman for Credit Suisse declined to comment on the report.
The weekend calls followed a sharp rise in spreads on the bank's credit default swaps (CDS), which offer protection against a company defaulting on its debt, indicating rising investor concern.
Credit Suisse shares, which have fallen by more than half this year, came off lows and were down about 9% by mid-morning.
A research note from JP Morgan analysts said that, based on the company's financials at the end of the second quarter, they view Credit Suisse's capital and liquidity as "healthy".
Given the bank has indicated a near-term intention to keep its CET1 capital ratio at 13-14%, the second-quarter end ratio is well within that range and the liquidity coverage ratio is well above requirements, the note added.
Credit Suisse had total assets of 727 billion Swiss francs ($735.68 billion) at the end of the second quarter, of which 159 billion francs was cash and due from banks, while 101 billion was trading assets, it noted.
While Credit Suisse's CDS spreads have widened, this should be seen in the context of widening credit spreads across the sector, which was expected in an environment of rising interest rates with ongoing macroeconomic uncertainty, the analysts said.
03 October 10:24
Credit Suisse shares tank 10% on restructuring, capital concerns. Financial Times reported the Swiss bank’s executives are in talks w/its major investors to reassure them amid rising concerns over the Swiss lender’s financial health. https://t.co/BHRobYQHuM pic.twitter.com/c37BhAsLCT— Holger Zschaepitz (@Schuldensuehner) October 3, 2022(Video) Prashant Nair, Mangalam Maloo & Sonia Shenoy Decode Trade Set-Up For The Day | Bazaar Morning Call