Daily Report 10 November 2023

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed 0.33% lower at the 72 227 level, with investors monitoring corporate earnings, as well as China’s economy that slipped into deflationary territory in October, raising doubts about its recovery.

Sappi reported results for the year ended 30 September 2023. The company said that sales declined 20.4% to $5.8 billion. Profit fell 51.7% to $259 million and headline earnings per share (HEPS) dropped 61.5% to $0.50, but the dividend remained unchanged at $0.15 per share. Looking ahead, Sappi said they expect macroeconomic challenges and lower consumer confidence to continue to affect demand for its products.

In a production update from ANGLOGOLD ASHANTI, the company said that gold production rose to 673 000oz in the third quarter from 652 000oz in the second quarter, mainly due to higher ore tonnes processed partly offset by lower overall recovered grades. The company remains on track to achieve full year gold production guidance, with Q4 gold production expected to be the strongest out of all the quarters this year.

SA Economy:

Mining production shrank by 1.9% from a year ago in September 2023, after a downwardly revised 2% drop in the prior month, compared with market forecasts of a 2% fall. This marks the third consecutive month of declining mining activity, largely due to lower output from diamonds (-61.4%), metallic minerals (-17.1%) and manganese ore (-5.6%).

Manufacturing production fell 4.3% year-on-year in September 2023, following a downwardly revised 1.5% rise in July and more than an expected 2.6% drop. Output fell significantly for food and beverages (-10.5% vs -2.9% in August) and motor vehicles, parts and accessories and other transport equipment.

Global Economy:

The number of Americans that filed for unemployment benefits eased by 3 000 from last week’s upwardly revised value to 217 000, holding close to 7-week highs from late October and in line with market expectations of 218 000.

Speaking at the annual IMF Research Conference, US Federal Reserve chair Jerome Powell said that interest rate hikes might still be on the table as inflation remains above the central bank’s 2% target. Based on the CME FedWatch Tool, which tracks interest rate futures, the probability of Fed officials holding interest rates steady next month is just over 90%.

Global Company:

The FTSE 100 closed 0.72% higher at 7 455.

The Hang Seng Index is trading 1.66% lower at 17 222.

Technology shares led the declines, with Alibaba Group falling 2.6% to HK$80, Tencent lower 1.3% to HK$302.80 and Meituan down 2.7% to HK$111.90.

Chinese chip maker Semiconductor Manufacturing International Corp (SMIC) fell 3,2% after the company reported that third-quarter profit fell 80%.

In China, the Shanghai Composite is down 0.56% to 3 226.

The Dow Jones Industrial Average closed 0.65% lower to 33 891, while the S&P 500 closed 0.81% lower at 4 347.

Nvidia shares rose 1.9% after media reports said that the chip company is planning to release three new chips for China.

Tesla shares fell 5.5% after a HSBC analyst downgraded the share to sell with the price target 30% down from its current valuation.

 Commodities:

Gold is trading higher by 0.46% at $1 957/oz, while Platinum is lower by 1.52% to $861/oz.

Brent crude was 1.05% higher at $80.26 a barrel.

 Currencies:

The rand traded at R18.40 against the US Dollar, R22.45 against British Pound and R19.55 against the Euro.

The Euro is slightly firmer against the US Dollar to trade at $1.0625.