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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Stocks in the Johannesburg Stock Exchange (JSE) were up, mirroring the modest gains in the global markets at the start of the week, which is likely to be dominated by news on the path for interest rates and inflation. Overall on the JSE, the All-Share index rose 1.47% to 66,350 points while the Top-40 index closed 1.68% higher at 60,074 points. Meanwhile, power utility Eskom has announced that stage two load shedding will return from Monday evening between 17:00 to 22:00, continuing until Thursday evening. In a statement issued on Monday, the utility blamed the latest round of blackouts on a shortage of generation capacity.

EUROPEAN MARKET COMMENTARY

European stocks closed higher on Monday after a tumultuous five days of trading last week. The pan-European Stoxx 600 closed up by around 0.9%, with banks surging 3.3% to lead the gains as most sectors and major bourses ended in positive territory. French markets nudged higher but lagged other major European bourses after President Emmanuel Macron lost his absolute majority in the country’s parliamentary election, potentially jeopardizing his economic agenda. On the data front in Europe, German producer prices soared by 33.6% year-on-year in May, their largest increase on record, according to new official statistics published Monday.

US MARKET COMMENTARY

Markets in the U.S. were closed on Monday for a public holiday.

ASIAN MARKET COMMENTARY

Asia-Pacific markets were mostly buoyant this morning. Meanwhile, the Reserve Bank of Australia governor Philip Lowe said in a speech that he expected inflation in Australia to peak at around 7% by the end of the year as pandemic-related supply chain disruptions resolve. Lowe said monetary policy tightening and interest rate hikes globally would work together to drive down inflation by creating a balance between the demand and supply of goods.

CURRENCY MARKET COMMENTARY

The rand softened slightly against the dollar on Monday, as investors continued to assess risks to the economy from tighter U.S. monetary policy following the Federal Reserve's biggest interest rate increase in a quarter of a century. At the close of the day, the rand was trading around R16.04 to the dollar, 0.07% weaker. Meanwhile, the Australian dollar rose this morning after the central bank flagged more rate hikes were on the way, but the uptick was restrained by lower commodity prices, while the Japanese yen languished near a 24-year low.

COMMODITIES MARKET COMMENTARY

Gold prices edged up earlier today as the dollar eased, while investors kept a keen eye on posturing from major central banks on interest rate hikes for a clearer outlook for bullion. Oil prices rose 1% in early trade this morning, clawing back more of last week's losses as the focus returned to tight supply of crude and fuel products versus concerns about a recession hitting demand down the track. Supply concerns are buoying the market, as Western sanctions on Russian oil bite and questions linger over how Russian output might fall due to sanctions on equipment needed for production.

LOCAL COMPANIES

OMNIA HOLDINGS LIMITED (OMN) +2.0%

'These results reflect the ongoing disciplined execution of our strategy in an increasingly complex and uncertain trading environment. Our teams performed well and focused on customer needs whilst leveraging the strength of our integrated supply chain and manufacturing capabilities. This allowed us to capture increased sales volumes while prudent cash management further supported our strong financial position at year end. Our people remain focused on the purposeful impact we make in the markets in which we operate. We will continue to grow our business organically and inorganically in green technologies and expand in selected geographies aligned to Omnia’s purpose and enhance the impact on a greener world, underpinned by a culture of safety.’ Seelan Gobalsamy (CEO). Revenue increased by 30% or R21 437 million (FY2021: R16 436 million). Headline earnings per share increased by 86% or 672 cents (FY2021: 361 cents). Earnings per share increased by 79% or 653 cents (FY2021: 364 cents).

STOR-AGE PROPERTY REIT LIMITED (SSS) +1.2%

SENS highlights include: Final dividend of 55.30 cents. Total return of 16.5%. Rental income and net property operating income up 15.0% and 16.7% respectively. Same-store rental income up 10.0% SA; 21.2% UK. Portfolio occupancy up 24 100m² (SA 9 700m²; UK 14 400m²). Total occupancy, including acquisitions and new developments, of 88.1% (SA – 88.1%; UK – 88.3%). Same-store closing occupancy over 90.0% in SA and the UK. Net investment property value up 22.4% to R9.26 billion. Loan-to-value ratio of 27.9%. Acquired 11 trading properties (SA – 2; UK – 9), completed three new developments in SA and increased the GLA in the portfolio by 56 500m². Development pipeline of 14 properties, four of which are already in progress with our JV partners. Moorfield JV – construction commenced at two locations (Heathrow and Bath) and two further sites secured. Announced development JV with Nedbank to develop two new properties in SA (Morningside and Bryanston). SA development pipeline of ten properties (c.R900 million and 60 800m² GLA). Completed restructuring of GBP debt facilities including seven-year £21 million sustainability-linked loan from Aviva Investors. Raised R575 million in an oversubscribed accelerated bookbuild in January 2022.

INTERNATIONAL COMPANIES

Tesla (TSLA) (0.0%)

Former Tesla employees have filed a lawsuit against the U.S. electric car company alleging its decision to carry out a "mass layoff" violated federal law as the company did not provide advance notice of the job cuts. The lawsuit was filed late Sunday in Texas by two workers who said they were terminated from Tesla's gigafactory plant in Sparks, Nevada in June. According to the suit, more than 500 employees were terminated at the Nevada factory. The workers allege the company failed to adhere to federal laws on mass layoffs that require a 60-day notification period under the Worker Adjustment and Retraining Notification Act, according to the lawsuit. They are seeking class action status for all former Tesla employees throughout the United States who were laid off in May or June without advance notice.

Volvo (VOLV.B) +0.2%

Volvo Trucks said Monday that it had begun to test vehicles that use “fuel cells powered by hydrogen,” with the Swedish firm claiming their range could extend to as much as 1,000 kilometers, or a little over 621 miles. In a statement, Gothenburg-headquartered Volvo Trucks said refuelling of the vehicles would take under 15 minutes. Fuel cells for the vehicles will be provided by cellcentric, a joint venture with Daimler Truck that was established in March 2021. “Hydrogen-powered fuel cell electric trucks will be especially suitable for long distances and heavy, energy-demanding assignments,” Roger Alm, president of Volvo Trucks, said.

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Research Team
Media, Sasfin Wealth