Unum Capital: Market Commentary

Unum Capital: Market Commentary

New Trade Ideas: Shares of Netcare (NTC) and Coronation Fund Managers (CML) appear to be offering short term trading opportunities. Both of these setups are discussed after the market commentary below.
 
To participate, please contact the Unum Trading Desk on 011 384 2920 or e-mail tradingdesk@unum.co.za to have the trader place the trade.
 
What’s Going On Out There?
On Wednesday, stocks on the JSE closed in positive territory, with gains across the board, led by the Resources sector (+1.60%), followed by Financials (+0.95%) while Industrials ended marginally in the green, adding 0.04% for the session. Contributing to the positive performance for the session were a number of market movers including Amplats which added 5.76% as platinum gained 4%, South 32 (+5.59%) as well as Sibanye-Stillwater which closed at R21.00, or 5.47% higher. The losing lane was lead by two dual-listed stocks, Mondi Plc (-2.27%) and British American Tobacco (-1.71%) after British Prime Minister Boris Johnson requested that Parliament be suspended ahead of Brexit.
 
Despite losing around 0.46% versus the US Dollar, the Rand remained range-bound between support of 15.15 and 15.45 while versus the British Pound the local unit continued to trade near two and half month lows. Drivers for the currency in continued uncertainty around trade talks between the US and China as well as local developments included news that the South African government may be forced to inject more money into state power firm Eskom by the end of March if the struggling utility fails to meet its borrowing plan. This was reported by Reuters who quoted a Treasury official’s communication to parliament on Wednesday.
 
In company news, Bid Corp reported a strong set of results for the year ended 30 June 2019 with Revenue up 9.8% to R123bn, HEPS up 12.5% to 1433c while Cash Generated by continuing operatings before working capital was higher by 15.4% to R8bn. At one point yesterday Dischem Pharmacies was higher by 6% as the market responded to it’s Trading Update for the five months ended 31 July 2019. For the period group recorded revenue growth of 13.5% to R9.9bn over the corresponding period in the prior year. Chief executive Ivan Saltzman commented: “We are pleased to see that the Group delivered strong revenue performance in the five-months to 31 July 2019 in a tough economic environment with increased competition and a constrained consumer. Despite the intraday price gain, DCP only gained 0.67% for the session as the market digested the FY2019 once-off earnings impacts, which will negatively impact the first-half earnings of FY2020.
 
In Europe, equities ended in the red with the EuroStoxx50 index lower by 0.15%, the DAX easing by 0.25% while France’s CAC 40 index shed 0.34%. Across Large Cap Europe, retail giant Inditex outperformed with a 1.64% gain while Europe’s second largest insurers AXA shed 2.23%.
 
In the United States, stocks closed higher, with the Dow Jones Industrial Average rising by 258.20 points, or 1.0%, to 26,036, while the S&P 500 added 18.78 points, or 0.65%, to 2,887.94. The Nasdaq Composite index gained 29.94 points, or 0.38%, to 7,856.88. Outperforming the market were energy stocks as a report by the Energy Information Administration showed that inventories fell by 10 million barrels during last week.
 

In the Bond market, the US 10 Year tested an intraday low of 1.44%, again trading below the 2-year note which traded at 1.48%. On the commodities front, Gold retreated from multi-year highs as equities gained, while Platinum Futures jumped by 4.15% to a high of $912, testing it’s highest level since 22 April.

This morning in Asia, indices are flat to down, with the Nikkei225 lower by 0.09%, the Shanghai Composite lower by 0.10% and the Hang Seng shedding 0.36%

 

Please chat to the Unum Capital Trading Desk to take advantage of any trading opportunities.
 
All the best,
Lester Davids
Unum Trading Desk Analyst
 
e-mail: clientservices@unum.co.za
Tel: 011 384 2920

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