In todays taking stock, we look discuss Jeff Bezos to step down as Amazon CEO.
6 reading min
03 Feb 2021
SOUTH AFRICAN MARKET COMMENTARY
Local stocks retreated after early gains as mining companies lost steam even as investors stayed bullish on the prospects of a faster economic recovery with eyes on the US stimulus aid. The benchmark All-Share index slipped 0.1% (now at 62,734 index points) while the blue-chip Top 40 companies index was down 0.15%. The diversified mining index slid 2.86% as platinum and gold prices dropped by over 2.8% and 1.3% respectively. However, banking and financial stocks, often considered the true reflection of economic prospects, closed up more than 2%.
EUROPEAN MARKET COMMENTARY
European stocks closed higher on Tuesday amid investor optimism for a post-pandemic recovery, while fears over a speculative retail trading frenzy in the US waned. The pan-European Stoxx 600 ended Tuesday’s session up by 1.3%, with travel and leisure shares climbing 3.2% to lead gains as all sectors apart from basic resources and telecoms held in positive territory. On the data front, the euro zone economy dropped by 0.7% in the final quarter of 2020 as governments stepped up social restrictions, Eurostat revealed on Tuesday, while a preliminary reading points to an annual GDP contraction of 6.8%.
US MARKET COMMENTARY
US stocks jumped on Tuesday, building on a strong rally in the previous session as concerns about a speculative retail trading frenzy continued to ease. The back-to-back advance in the broader market coincided with a sharp reversal in GameStop, the video game stock that captivated Wall Street with its massive short squeeze coordinated by a band of retail investors on social media. Meanwhile, investors will be following stimulus negotiations in Washington, after congressional Republicans made a counteroffer to President Joe Biden’s $1.9 trillion stimulus plan on Sunday.
ASIAN MARKET COMMENTARY
Stocks in Asia traded mixed this morning as a private survey showed China’s services sector activity growth slowing sharply in January. The Caixin/Markit services Purchasing Managers’ Index for January came in at 52, representing growth at its slowest pace in nine months. That compared against December’s reading of 56.3. In corporate news, Hong Kong-listed shares of Alibaba fell more than 4% in morning trade despite the Chinese tech giant reporting that its cloud division was profitable for the first time.
CURRENCY MARKET COMMENTARY
The rand edged up on Tuesday, supported by progress in South Africa's coronavirus vaccine purchases and an easing of lockdown restrictions, while stocks slipped slightly. At the close, the rand was 0.68% firmer at R14.97 against the US dollar. The rand's attractive yield, or carry, compared to other emerging market currencies, continued to shield it from being negatively affected by signs of a weak local economy.
COMMODITIES MARKET COMMENTARY
Silver prices rebounded this morning after an over 8% plunge in the previous session prompted investors to buy in, although the social media-driven rally that started last week appears to have run out of steam. Oil rose in early trade today on expectations global oil stocks will fall back to more normal levels this year and as US lawmakers moved closer to approving President Joe Biden’s $1.9 trillion COVID-19 aid bill without Republican support.
Rebosis Property Fund (REB) -10.0%
Rebosis Property Fund is unhappy about the censure it received from the JSE on Tuesday concerning a compliance issue linked to the group’s handling of its 2019 financial results. The group, led by property entrepreneur Sisa Ngebulana, responded to the censure in a Sens statement on Tuesday afternoon. “Rebosis notes the public censure issued by the JSE regarding the breach of paragraph 3.22(b) of the JSE listings requirements resulting from the publication of preliminary results for the financial year ended 31 August 2019 (“the 2019 Financial Results”) that were not, at a minimum, reviewed,” it said. Nedbank Corporate and Investment Banking, which is the property fund’s JSE sponsor, is also entangled in the JSE’s censure of the issue.
Curro Holdings (COH) -6.0%
COVID-19 has had a severe impact during 2020 and Curro was presented with various challenges as such. Management has dealt with these challenges, as far as it was within their control, but it nevertheless affected the results for the year ended 31 December 2020. Headline earnings per share (HEPS) is expected to come in around 34c to 39c or 43.5% to 35.2% lower than the previous period. Earnings per share (EPS) is expected to come in at -5c to -9c or 110.4% to 118.7% lower. Following a detailed and prudent review of the business plans for each of its schools, the Company recognised impairments of R202m (net of tax) in the 2020 financial year, relating to lower-yielding school assets. The Company is currently finalising its financial results for the year ended 31 December 2020. These results will be published on or about Wednesday, 17 March 2021 due to certain logistical challenges brought about by the latest national lockdown.
Amazon (AMZN) +1.1%
Amazon CEO Jeff Bezos will leave his post later this year, turning the helm over to the company’s top cloud executive, Andy Jassy, according to an announcement Tuesday. Bezos will transition to executive chairman of Amazon’s board. The news came alongside an earnings report in which Amazon posted its first $100 billion quarter. Amazon’s Web Services (AWS), under Jassy, reported 28% revenue growth for the fourth quarter. About 52% of Amazon’s operating income was attributed to AWS as of October 2020. Shares of Amazon were up about 1% in extended trading Tuesday on the back of the earnings report and the C-suite news. The company’s stock has gained about 4% so far in 2021 and is up nearly 70% in the last 12 months.
Alphabet (GOOGL) +1.4%
Google parent Alphabet saw record revenues for the second straight quarter despite the pandemic as advertisers unleashed spending during the holidays. Cutbacks by travel and entertainment advertisers were more than offset by new spending from online retail clients and others during lockdown. Google's advertising business, including YouTube, accounted for 81% of Alphabet's $56.9bn in fourth-quarter sales, up 23% compared with a year ago. The Cloud unit also saw strong growth. Google Cloud sales were $3.83bn, or $13.1bn for the full year, up 46% from 2019. In a new disclosure, Alphabet said Google Cloud posted an operating loss of $1.24bn in the fourth quarter and $5.6bn for 2020, a 21% wider loss than in 2019. Google, which generates more revenue from internet advertising than any company globally, has long faced questions over whether it can spin the cash from its advertising business into a newly profitable venture. The new financial details suggest that goal still may be years away. Alphabet's quarterly profit rose 43% to $15.2bn, sending shares up 6% to $2,036 in after-hours trading on Wall Street. The stock has risen by 9.5% so far this year.
04 February 2021
7 reading min
Taking Stock - Aspen to avoid a potentially hefty EU antitrust fine.
In todays taking stock, we look at how Aspen is likely to avoid a potentially hefty EU antitrust fine as it offers to cut its cancer drug prices.
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