Taking Stock - Travel and leisure stocks led gains in Europe.

In todays taking stock, we discuss how Travel and leisure stocks led gains in Europe .

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Shares on the Johannesburg Stock Exchange posted another day of gains, with the All-share index rising 1.27% to 66,558 points and the Top-40 index up 1.4% at 60,502 points. Real estate firms underperformed, and banks and retailers advanced sluggishly following some of the worst unrest of the post-apartheid era last week. The focus will shift to the Reserve Bank's interest rate decision later today. A Reuters poll published last week predicted the bank would keep its repo rate at 3.5% as it looks through temporary high inflation and to support the economy.

 

 

EUROPEAN MARKET COMMENTARY

European stocks closed higher Wednesday, as investors tracked another batch of quarterly earnings and shrugged off Covid-19 fears. The pan-European Stoxx 600 provisionally closed up by 1.7%, with travel and leisure stocks adding 3.7% to lead gains as all sectors and major bourses entered positive territory. British fashion retailer Next jumped 7.5% after smashing second-quarter sales forecasts and British media company Future climbed 9.2% after raising its full-year guidance.

 

 

US MARKET COMMENTARY

US stocks climbed higher on Wednesday as equities continued their rebound from a one-day rout to start the week. Energy stocks led the continued rally as oil continued to rebound after falling below $70 a barrel on Monday. Dow member Coca-Cola gave an early boost to market sentiment after reporting quarterly revenue that topped pre-pandemic 2019 levels and raising its full-year forecast. Coca-Cola shares gained more than 1%.

 

 

ASIAN MARKET COMMENTARY.

Shares in Asia-Pacific were higher in morning trade today, with markets in Japan closed for a holiday. the S&P/ASX 200 in Australia advanced 0.74%. Shares of major miner BHP soared nearly 3% after the firm announced Thursday the signing of a nickel supply agreement with Tesla. Still, concerns over the coronavirus situation in Asia-Pacific may continue to weigh on regional sentiment. Australia’s two largest states on Wednesday reported sharp increases in new Covid infections, while Indonesia saw record high deaths from the virus, according to Reuters.

 

 

 

CURRENCY MARKET COMMENTARY

The rand gained on Wednesday, lifted by improved risk appetite on global markets. The rand reacted little to data showing consumer inflation slowed to 4.9% year on year in June from 5.2% in May, staying within the South African Reserve Bank's 3% to 6% target range. At the close, the rand was trading around R14.59 to the dollar, 0.13% firmer.

 

 

COMMODITIES MARKET COMMENTARY

Gold inched lower this morning, as the dollar remained strong and investors looked past economic threats from rising cases of the delta coronavirus variant and opted for riskier assets instead. Oil prices held on to most of their gains from the previous session earlier today, as signs of stronger demand helped offset an unexpected rise in US inventories. Crude inventories in the world's top oil consumer rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, US Energy Information Administration data showed.

LOCAL COMPANIES

Transaction Capital (TCP) +3.1%

WeBuyCars, majority owned by Transaction Capital, has confirmed it has purchased the Ticketpro Dome in Northgate, Johannesburg from owners the Sasol Pension Fund. In a statement it says it will create one of the biggest used-car dealerships in the world in the facility. The structure was originally built to be a permanent car showroom, but this never materialised. It was launched as a multi-purpose entertainment and events arena in 1998 and soon after housed the temporary casino for Tsogo Sun’s third property, Montecasino. At that point, it was known as the Sundome. MTN soon joined as a naming sponsor. When the casino moved to its permanent home in Fourways, the future of the venue became uncertain. In 2004, Coca-Cola signed an initial five-year naming rights agreement. Ticketpro became naming rights partner in 2015. CEO of WeBuyCars Faan van der Walt says the Dome will allow the business to increase its footprint in Johannesburg. Given its size, it will be able to store approximately 1 500 vehicles. WeBuyCars said the location – it is easily accessible from the N1 – and size of the new dealership would deliver “unrivalled convenience, value and selection to customers”. The business has eight branches across the country, of which four are in Gauteng. The largest is in Midstream, between Midrand and Centurion. Its newest branch, Germiston, launched in June 2021. Its Brackenfell, Cape Town showroom was built by Atterbury and is valued at R150 million. It has 13 500m2 of floor space and can accommodate approximately 700 cars. Transaction Capital in May revealed that WeBuyCars was selling in excess of 8 000 vehicles per month by March of this year. It expects this number to reach 10 000 within 18 months. At that point, it owned 49.9% of the business, but has subsequently increased this to 74.9%. It estimates roughly 1.1 million used vehicle sales per year currently, with an annual compound growth rate over the last decade of 1.8% per annum (versus 0.9% for new cars).

 

 

Pick n Pay (PIK) +0.7%

Supermarket group Pick n Pay on Wednesday updated the market about the impact of last week’s riots in KwaZulu-Natal and Gauteng on its business, confirming in a voluntary Sens announcement that 136 stores across the company were “looted and/or damaged by fire”. Half (68) of the affected outlets were Pick n Pay-branded stores and the other half were Boxer stores, which largely targets the lower end of the South African grocery market. Of the overall total, the group noted that 28 were Pick n Pay company-owned supermarkets, 15 were Pick n Pay franchise stores and 64 were Boxer supermarkets. “The remaining 29 stores comprised Pick n Pay Clothing stores [2], Express Convenience stores [14], independent Market stores [9] and Boxer Build stores [4]. In addition, 76 liquor stores across Pick n Pay and Boxer were looted and/or burned, but were not in any event trading due to the government’s Covid-19 restrictions,” Pick n Pay said. The group also highlighted that two of its distribution centres (DCs) in Pinetown Durban were looted and damaged.

INTERNATIONAL COMPANIES

 

Coca-Cola (KO) +1.3%

Coca-Cola on Wednesday reported a second-quarter revenue that surpassed 2019 levels, prompting the company to hike its full-year outlook. Shares of the company rose more than 2% in morning trading. Earnings per share came in at 68 cents adjusted vs. 56 cents expected, while revenue was reported at $10.13 billion vs. $9.32 billion expected. Coke reported fiscal second-quarter net income of $2.64 billion, or 61 cents per share. That’s up from $1.78 billion, or 41 cents per share, a year earlier. Organic revenue, which excludes the impact of acquisitions, divestitures and foreign currency, climbed 37%. A year ago, the company reported its biggest plunge in quarterly revenue in at least three decades as lockdowns led to cratering demand.

 

BHP (BHP) +1.3%

Shares of mining giant BHP Group jumped 3% in Australia on Thursday morning, after the company announced it will be supplying nickel to electric carmaker Tesla. In a statement on Thursday, BHP said one of its mines based in Western Australia, Nickel West, will be supplying the world’s largest electric vehicle maker with nickel, a key raw material used in EV batteries. “Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade, in large part to support the world’s rising demand for electric vehicles,” BHP Chief Commercial Officer Vandita Pant said in a statement. BHP currently derives most of its earnings from iron ore, used predominantly to make steel.

 

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