Taking Stock - Maersk shipping shut down all its depots.

In today's taking stock we discuss, Maersk has shut down all its depots, warehouses and cold stores in Durban and Johannesburg.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

The local stock market rebounded yesterday as investors followed cues from the United States, where the S&P 500 touched a record high after Federal Reserve Chair Jerome Powell indicated the central bank would stick to its accommodative policy. Stocks that are dependent on the local economy, such as banks and retail companies, also recouped some of their losses seen in last few days. The benchmark All-Share index closed up 1.21% at 67,898 points and the blue-chip Top 40 index ended up 1.33% to 61,754 points.

 

EUROPEAN MARKET COMMENTARY

European stocks inched lower Wednesday as traders reacted to hotter-than-expected US and UK inflation figures and comments from Fed Chairman Jerome Powell. The pan-European Stoxx 600 provisionally closed about 0.1% below the flatline, with travel and leisure stocks dropping 1% to lead losses while basic resources gained 1%. New figures released Wednesday showed UK inflation also rose by more than expected in June, with the consumer price index growing 0.5% month-on-month versus a 0.2% consensus estimate.

 

US MARKET COMMENTARY

The S&P 500 closed slightly higher after Federal Reserve Chairman Jerome Powell said the central bank will maintain its easy monetary policies. The central bank chief is also scheduled to testify before the Senate Committee on Banking, Housing and Urban Affairs on Thursday. Apple shares gained 2.4% after the company reportedly asked suppliers to ramp up production of its next-generation iPhones by 20%. JPMorgan also added the tech giant to its focus list and raised its price target on the stock to imply 20% potential upside from Tuesday’s close.

 

ASIAN MARKET COMMENTARY

Shares in Asia-Pacific were mixed in Thursday trade as China reported its second-quarter gross domestic product (GDP) grew. China’s GDP rose 7.9% year-on-year in the second quarter, official data showed Thursday. That was lower than expectations by economists in a Reuters poll for an 8.1% rise. Meanwhile, retail sales in June jumped 12.1% from a year earlier, data from the National Bureau of Statistics showed — above analyst expectations for a 11% increase, according to Reuters.

 

CURRENCY MARKET COMMENTARY

The rand recovered on Wednesday from the three-month lows plumbed in recent days, even as the army and police struggled to quell days of looting and violence. President Cyril Ramaphosa said on Wednesday he might order more troops to reinforce the army and the police already deployed. At the close, the rand was trading around R14.48 to the dollar or 1.8% firmer. The dollar retreated from recent peaks earlier today, following further reassurance from Federal Reserve chair Jerome Powell that he was in no rush to tighten policy, though losses were kept in check by investor nerves ahead of Chinese growth data.

 

COMMODITIES MARKET COMMENTARY

Gold prices were flat this morning, hovering near a four-week high scaled in the previous session, after US Federal Reserve Chair Jeremy Powell signalled "powerful support" for economic recovery and boosted the metal's appeal as an inflation hedge. Oil prices fell more than 1% earlier today, extending losses as investors braced for more supplies following a compromise between top OPEC producers and as US fuel stocks rose, raising concerns about demand in the world's largest consumer.

LOCAL COMPANIES

Standard Bank (SBK) +2.1%

Standard Bank has appointed an unnamed acting CEO to replace the outgoing country MD, Adimohanma Chukwuma Nwokocha, who was fined roughly R1.5 million by the Bank of Mozambique this week for fraudulent activities, following an on-site inspection by the bank. Also fined was Domingos Francisco Madeira, director of corporate and investment banking “for serious infringements of prudential and exchange rate nature,” according to a statement by Bank of Mozambique. Madeira was fined the equivalent of R3.3 million. Standard Bank was fined the equivalent of R66.18 million ($4.6 million) and suspended from currency exchange activities for a year. Both senior bank officials are debarred from management functions in the financial sector for six years. The fines were imposed on the bank and its two senior officials for manipulating exchange rates, setting up an illegal payments system outside the country and carrying out irregular financial derivatives operations to hedge exchange rate risks, among others. The statement says Standard Bank is cooperating with Bank of Mozambique to remedy the irregularities. Last week Club of Mozambique reported that Standard Bank customers with foreign currency accounts suddenly found themselves unable to access their salaries. This followed the decision by the Bank of Mozambique to suspend all activities involving the conversion of foreign currency in the foreign exchange markets. Standard Bank is one of the top three banks in the country. Standard Bank issued the following statement: “In keeping our customers, partners and the general public informed, Standard Bank Mozambique would like to advise that we will continue to engage with Banco de Mozambique for clarification on the foreign exchange allegations. Besides the affected areas, we wish to assure our customers that the daily operations of the bank will not be affected.  As part of Standard Bank’s business continuity processes, an acting chief executive has been appointed to lead our executive management team.

 

Maersk (MAERSK.B) +0.3%

Maersk has shut down all its depots, warehouses and cold stores in Durban and Johannesburg, a company spokeswoman said on Wednesday, as looting in the two South African cities bearing the brunt of rampaging crowds continued. The port of Durban has had many of the terminals shut over the last 24 hours, however at this stage we have not triggered any contingencies that will cause ships not to call at Durban,” Kerry Rosser, the company’s Africa spokeswoman, told Reuters.

INTERNATIONAL COMPANIES

Bank of America (BAC) -2.5%

The company said revenue fell 4% from a year earlier, driven by a 6% drop in net interest income because of lower interest rates. Lower trading revenue and the absence of a $704 million gain a year earlier also hit revenue, the bank said. Bank of America’s results show the impact of falling interest rates on the industry. Banks gather deposits and extend loans; falling interest rates squeeze the margin between what they pay depositors and charge borrowers. The bank’s net interest margin of 1.61% in the quarter was 26 basis points lower than a year earlier and below the 1.67% estimate of analysts surveyed by FactSet.

 

Wells Fargo (WFC) +4.0%

Wells Fargo on Wednesday reported second-quarter earnings and revenue results that topped Wall Street’s expectations as it continued to release funds it had set aside during the Covid-19 pandemic to safeguard against widespread loan losses. Wells Fargo results were boosted by a $1.6 billion release of its credit loss reserves as consumers perform better than the bank anticipated amid the pandemic recession. Financial firms have started to release those reserves as the recovery has accelerated in 2021, boosting profits as a result. Wells also reported a net interest margin — a measure of how much a bank earns from the difference between what it pays on deposits and what it takes in on loans — of 2.02% for the quarter.

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Media, Sasfin Wealth

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