In today's taking stock we discuss, Massmart said on Friday protesters had looted 41 of its stores and two of its distribution centres.
6 reading min
19 Jul 2021
SOUTH AFRICAN MARKET COMMENTARY
Local stocks closed weaker on Friday, with the Johannesburg All-Share index down 1.49% (now at 66,530 index points) while the Top-40 index fell 1.63%. Mining firms were the biggest drag to the bourse, with the index falling 3.18% as gold, silver, platinum and palladium prices fell on a stronger dollar and rebounding yields. Bucking the trend was scandal-hit South African retailer Steinhoff International, which jumped 12.66% after it said it was increasing the amount of its proposed lawsuit settlement offer by an additional 243 million euros ($287 million), taking the total to 1.2 billion euros.
EUROPEAN MARKET COMMENTARY
European stocks closed lower on Friday as investors monitored economic data, corporate earnings and the spread of the delta Covid-19 variant. The pan-European Stoxx 600 ended the session down 0.3%, with miners tumbling 2.8% to lead losses as the majority of sectors and major bourses finished in the red. The benchmark was down about 0.7% on the week, having hit a record high on Monday. Euro zone inflation slowed in June, official data confirmed on Friday, with consumer prices rising 1.9% annually after a 2% climb in May, marking the first slowdown since September 2020.
US MARKET COMMENTARY
US stocks fell on Friday, pushing the Dow Jones Industrials Average into the red for the week, as inflation fears overshadowed strong retail sales numbers and better-than-expected earnings reports. A US consumer sentiment index from the University of Michigan came in at 80.8 for the first half of July, down from 85.5 last month and worse than estimates from economists, who projected an increase. The report released Friday showed inflation expectations rising, with consumers believing prices will increase 4.8% in the next year, the highest level since August 2008.
ASIAN MARKET COMMENTARY
Asian shares slipped to a one-week low on Monday and perceived safe haven assets, including the yen and gold, edged higher amid fears of rising inflation and a surge in coronavirus cases, while oil prices fell on oversupply worries. Japan's Nikkei dropped 1.3% as did Australia's benchmark share index. South Korea's KOSPI was 1% lower, while Chinese stocks also started on the backfoot with the blue-chip index down 0.6%.
CURRENCY MARKET COMMENTARY
The rand firmed on Friday as days of unrest began to subside and communities took stock of looting and violence in which at least 117 people were killed. At the close of the week, the rand was 0.65% stronger as it traded around R14.46 versus the dollar. The dollar sat near its highest levels in months on Monday as the spread of the Delta coronavirus variant made investors nervous about the global recovery and sent money into safety.
COMMODITIES MARKET COMMENTARY
Gold prices edged higher on Monday as a fall in US Treasury yields and concerns over a global economic recovery slowdown due to the spread of the delta variant of the coronavirus lifted demand for the safe-haven metal. Benchmark 10-year Treasury yields dropped to a near two-week low at 1.2640%, reducing the opportunity cost of holding non-interest bearing gold. Oil prices fell more than $1 a barrel on Monday, after the OPEC+ group of producers overcame internal divisions and agreed to boost output, sparking some concerns about a crude surplus as COVID-19 infections continue to rise in many countries.
Steinhoff International Holdings (SNH) 12.7%
Two weeks after a Cape High Court judgment that could deal a crippling blow to Steinhoff’s bid to settle with its former shareholders, the company has said that improved trading conditions enable it to increase its settlement offer to former shareholders by 66%. The proposed improved offer would increase the payout to so-called market purchase claimants from between 4c and 6c in the euro to between 6.64c and 9.96c in the euro. One shareholder who is backing a class action by Hamilton described the proposal as “from less than nothing to a bit more than nothing”. In a Sens announcement issued on Friday afternoon the company also said it intends appealing the recent judgment and believes it has “reasonable prospects of success”. The ruling by Judge Lee Bozalek declared that a key aspect of the original settlement plan, which involved Steinhoff providing guarantees to financial creditors who held €465 million of bonds that had been issued by Steinhoff in 2014, was legally void. Friday’s statement by Steinhoff reflected the board’s frustration at the ongoing challenges to its attempts to settle with multiple groups of claimants. It stated that: “Those opposing the global settlement are working to delays its implementation despite the fact that delay will put at risk the interests of the large number of claimants who support the deal and who will otherwise face the prospect of waiting years for an uncertain outcome.” Steinhoff also reiterated that four of the six active claimant groups and Dutch shareholder association VEB have supported the settlement. However, it did not state what percentage of shareholders were represented by those four claimants. Indications are that Hamilton, which is opposed to the original settlement, represents at least 25% of the former Steinhoff shareholders. Moneyweb was unable to get a comment from Hamilton on the updated offer.
Massmart Holdings (MSM) +2.6%
Massmart said on Friday protesters had looted 41 of its stores and two of its distribution centres, with four sites suffering significant damage from arson, in some of the country’s worst unrest in years. “The full extent of the damage is still being assessed,” Massmart said in a statement, adding stores in vulnerable areas had been temporarily closed and it had insurance cover in place to minimise losses.
Zoom Video Communications (ZM) +1.5%
Zoom announced on Sunday that it’s buying Five9, a provider of cloud contact center software, in an all-stock transaction valuing the company at $14.7 billion. The deal marks Zoom’s first billion-dollar acquisition and comes as the company prepares for a post-pandemic world with employees returning to the office. It’s the second-biggest U.S. tech deal this year, behind Microsoft’s planned $16 billion purchase of Nuance Communications, according to FactSet. “We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” said Zoom CEO Eric Yuan in a press release. Five9 closed on Friday with a market cap of $11.9 billion, or $177.60 a share. Zoom said Five9 stockholders will receive 0.5533 shares of Zoom Video Communications for every Five9 share. That values Five9 at $200.28 a share, a 13% premium, and represents about 14% of Zoom’s market cap of close to $107 billion. Zoom has been among the top growth stories in the 16 months since Covid-19 caused a sudden shutdown of offices across the globe, forcing workers in finance, retail, tech and law offices to communicate from remote locations.
19 July 2021
4 reading min
Forex Daily Market - US consumer sentiment has gradually improved
In today's update, US consumer sentiment has gradually improved in recent months, reflected in the US Michigan consumer confidence index rising from 80.7 to 85.5 between December and June.
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