Daily Report 10 February 2023

SA Company News:

The Johannesburg Stock Exchange All-Share Index closed slightly higher at the 80 021 level.

In trading update from Kaap Agri, the company announced that group statutory revenue increased by 73.8% (17.8% like-for-like basis). The company said earnings for Q1 grew by 35.6% from R126.0m to R170.8m and headline earnings for Q1 grew by 30.9% from R130.5m to R170.8m.

British American Tobacco plc reported results for the year ended 31 December 2022. BATS said that group sales were up 2.3% vs SA consensus +3.4%, guidance of +2-4%, Adjusted operating profit £12.41B vs consensus £12.36B and Adj EPS 371.4p vs consensus 368.9p. British American Tobacco shares fell 5.51% to R624.60 per share.

SA Economy:

Mining production contracted by 3.5% year-on-year in December 2022, after an upwardly revised 9.2% drop in the previous month and compared with market forecasts of a 6% drop. The largest negative contributors were Iron Ore (-15.2% vs -19.3% in November), Diamonds (-36.9% vs -21.6%) and PGMs (-5.3% vs -22%).

Manufacturing production fell 4.7% year on year in December after falling by a revised 1.8% in November and more than market forecasts of a 2.5% drop.

Manufacturers and retailers of food and other essential products warned that consumers will face much higher prices unless the government urgently finds solutions to the power cuts that are crippling the economy.

Global Economy:

The annual inflation rate in China rose to a 3-month high in January of 2.1% but slightly below market consensus of 2.2%.

China’s producer prices dropped 0.8% year-on-year in January 2023, after a 0.7% fall in the previous month and worse than the market forecasts of a 0.5% decline.

The initial jobless claims in the US came in at 196 000 for the week ended 4^th of February, an increase of 13 000 from the prior week.

The U.K. economy showed no growth in the final quarter of 2022, but shrunk by 0.5% in December, more than analysts’ expectations.

Global Company:

The FTSE 100 closed 0.33% higher at 7 911, led higher by healthcare and consumer discretionary stocks.

Standard Chartered shares rallied more than 10% after reports that the First Abu Dhabi Bank made a potential offer for the British bank.

The Hang Seng Index is lower by 1.98% to 21 196. Tech shares fell the most, with Baidu Inc. falling 5.8%, and JD.Com down 5.5%.

In China, the Shanghai Composite is down 0.62% to 3 249.

Warren Buffett’s Berkshire Hathaway said that they have cut its holdings in BYD Co., the Chinese electric-car maker. Berkshire reported that it has sold 4.235 million of BYD shares at an average price of 257.90 Hong Kong dollars (US$32.85) a share. BYD Company shares is down 1.6%.

The Dow Jones Industrial Average closed 0.74% lower at 33 699, while the S&P 500 was down 0.89% to 4 081.

Walt Disney shares gained more than 2% after topping earnings estimates as well as announcing restructuring plans that includes job cuts and cost savings.

 

Commodities:

Gold is down 0.6% to $1 866/oz, while Platinum is lower by 2.17% to $957.90/oz.

Brent crude was 0.7% lower at $84.50 a barrel.

Currencies:

The rand traded at R17.80 against the US Dollar, R21.54 against British Pound and R19.08 against the Euro.

The Euro is slightly weaker against the US Dollar to trade at $1.0722.