Market Overview

Yesterday was a great day for the commodity market, as U.S. nonfarm payrolls came in well below the estimated 102,000. This predictably led to a weakness in the dollar (which now rests at $100.6) and strength in the commodity market, especially with the metals, as they made a killing, and will likely continue to stay in the green. Going into the day’s session, it’s important to remember that the U.S. market is closed due to a public holiday. This will reduce the day’s trading volume and have some impact on Monday’s session too.

Sasol (SOL)

Sasol has been dropping more or less since mid-June due to lower oil prices. This has the hallmarks of a market overreaction, as lingering problems in the supply chain keep oil refineries near peak profitability, particularly in the U.S., where Sasol also operates heavily. It’s also important to take into account that the conflict in the Middle East has led to heavy draw on strategic oil reserves everywhere. The subsequent refilling means that the demand for oil may not disappear for some time.

Local Stocks

Sanlam (SLM)

Sanlam received an upgraded for the second time in two weeks. This time to overweight, with a new target price of R117.5, an increase of 25%. Taking the stock’s recent performance into account, we speculate that R95-96 could be in the cards if it manages to break through the R92 mark.

Thungela Resources (TGA)

Thungela received a new rating of neutral today, with a target price of R100. While the company has struggled for most of June, it could see some relief, as Japan has announced a switch from natural gas to coal power plants, citing supply chain disruptions around the Strait of Hormuz.

Pick N Pay (PIK)

Pick N Pay has integrated an A.I. assistant ‘Penny’ into its shopping app ‘Asap!’, which, unlike its rival app, will not be locked behind a subscription. The full impact of the new addition will likely be felt in the mid to long term, so it might be of interest to keep an eye on the company as a whole.

Economic Data

With the U.S. market closed due to the 4th of July public holiday, today will be quiet on the earnings and economic data front.

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