Market Overview
The following is a partial recap of the market analysis shared during today’s morning Discord call.
We open to a red and yellow market, as yesterday’s CPI figures contributed to a new round of strength in the Dollar Index (DXY), at the cost of commodities and equities. We see weakness across the board in the metal space, which has led to a very risk-off sentiment, particularly as the market waits for the U.S. announcement regarding copper. For now, we expect a low-volatility market until a major catalyst shows up. We also recommend keeping an eye on the dollar inflation rate and the U.S. PPI numbers scheduled to be released later today, as it’s most likely to be the day’s catalyst.
Tencent (700)
Tencent had dropped by quite a bit following yesterday’s earnings. It was able to beat most expectations by a slight margin, but the capex (capital expenditure) figures were quite high, leading to uncertainty amongst investors and the subsequent drop. If the stock manages to hold at around the previous lows of HK$432, it could potentially make a comeback in the near future; otherwise, a test of HK$420 will be in order.
As a direct result of Tencent’s situation, we see a rotation out of Naspers (NPN) and Prosus (PRX), which at one point were down by over 7%. We see R800 and R790 as the levels to keep an eye on, where Naspers could potentially bounce, while for Prosus we’ve marked R710 and R700.
From left to right: Tencent (700), Naspers (NPN), and Prosus (PRX).
Local Stocks
The commodities have been in the driving seat of the market for the last few days. But with uncertainty in their immediate future, we recommend keeping an eye on the banks, as the likes of Standard Bank (SBG) and Absa (ABG) could become the play today.
Sibanye-Stillwater (SSW)
Sibanye was upgraded to buy Citibank, with a target of $13.50 (around R54.5), which is an increase of 21%.
DRDGOLD (DRD)
DRD released a decent trading statement today, which, in conjunction with the good performance of the last few days, could see it go further up. However, it’s worth taking into account that the company usually suffers from low trading volume, and its high capital expenditure and scale make it more sensitive than other gold miners to shifts in the price of gold. So trade carefully!
Earnings & Economic Data
Pre-Market Earnings
Applied Industrial Technologies (AIT)
Applied Industrial Technologies is a U.S.- based company producing bearings, power transmissions, and other industrial components.
JD.com (JD)
JD is a Chinese tech and e-commerce multinational, often regarded as ‘China’s Amazon’.
Bullish (BLSH)
Bullish is an American crypto company, which has shown the ability to move quite a bit in the past.
After-Market Earnings
Applied Materials (AMAT)
Applied Materials is an American tech company, specialising in providing equipment and software for semiconductor manufacturing.
Economic Data
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