Markets Overnight:
The US markets reversed earlier losses after Europe’s close, on a report in the Guardian newspaper that Germany’s Angela Merkel and France’s Nicolas Sarkozy had agreed to increase the rescue fund to €2bn, which was contra to the reports coming from people close to the debacle.
US company third quarter reporting added to the positive trend as Bank of America and JPMorgan reported a strong set of results, ignoring Goldman Sachs second reported loss in the company’s history. One of the best known companies in the world, Apple, missed expectations leading the stock down 7%.
Talks surrounding the Greece “haircut” – which refers to the value of the Greece debt that they intend to ‘write down’, in other words, the loss investors in Greece bonds are likely to take, is around 50%. France and Germany’s stance on the haircuts differ substantially; Germany is calling for the 50% cut while France has continued to resist it.
Spain has been downgraded for the third time since 2010 with Moody’s cutting its sovereign credit rating by three notches to A1, from Aa2.
South Africa:
South African futures were volatile but trending sideways with little direction in the face of the Sunday meeting held in Europe surrounding the solution to the crisis. The Top40 Index bounced off the 200day moving average at 28 200, before closing just under 28 000 points. The last week has seen a clear consolidation as the market anticipates more news on Europe.
Company News:
Steinhoff [SHF] said it would sell several industrial subsidiaries to Kap International Holdings [KAP] in exchange for shares in a $1.1bn deal that will give it control of the manufacturing firm. The transaction will lift Steinhoff’s stake in Kap to 88% from 34%. Steinhoff, which has a 32.4% stake in JD Group [JDG], also said it secured a call option to buy a further 27.2 million shares in JD Group in exchange for 435.2 million Kap shares.
Shares of Freeworld Coatings [FWD] surged yesterday after its majority owner, Japan’s Kansai Paint, expressed intent to acquire the outstanding shares in Freeworld.
Pick n Pay [PIK] reported a 40% decline in first-half profit, hit by the start-up costs for its newly launched shopper reward programme and investments in its distribution system.
BHP Billiton [BIL] reported a strong quarterly increase in its iron ore and petroleum production, but said copper output slumped.
Today:
Local data released today is the inflation and retail sales. Important news from the rest of the world to look out for is Europe's current account as well as US housing data and CPI. Some of the big US companies reporting today are American Express, Blackrock Inc, eBay Inc and Morgan Stanley.
