Taking Stock - Local markets rise.

In todays taking stock, we look at the rise of Local markets for the third consecutive session.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

 

Local equities rose for a third consecutive session as improved risk sentiment boosted global stocks on news that a vaccine for COVID-19 was imminent. The All-Share index rose 1.14% reaching its highest level in more than 11 months at 58,948 index points, while the blue-chip Top 40 index closed up 1.36%. Gains, however, were curbed as gold mining stocks fell 2.95% with bullion producer Harmony Gold closing down 3.96%. Platinum miners, Impala Platinum gained 3.82% and Northam Platinum rose 2.72% on the back of a firmer platinum price.

 

 

EUROPEAN MARKET COMMENTARY

 

European stocks closed mixed on Thursday as Brexit uncertainty weighed on investor sentiment. The pan-European Stoxx 600 closed marginally above the flatline, with the travel and leisure stocks surging 3.5%, while chemical shares declined 1.1%. Britain’s FTSE 100 index outperformed its major European counterparts, climbing 0.4%. EU officials reportedly said Thursday that “significant divergences” remain on the thorniest issues in talks with the UK.

 

 

US MARKET COMMENTARY

 

The S&P 500 fell marginally from a record high in a late-day sell-off on Thursday after a report said Pfizer is dialling back its coronavirus vaccine rollout plan for this year due to supply chain issues. Major averages cut gains quickly in the final hour of trading after Dow Jones reported Pfizer now expects to ship half of the doses it had previously planned this year after finding raw materials in early production that didn’t meet its standard. Earlier in the session, sentiment was boosted by better-than-expected jobs data.

 

 

ASIAN MARKET COMMENTARY

 

Stocks in Asia were mixed this morning after the Pentagon added more Chinese firms to a blacklist of alleged Chinese military companies. Chinas largest chipmaker Semiconductor Manufacturing International Corp and oil producer CNOOC were among firms added to the blacklist. Trading in the Hong Kong-listed shares of SMIC was halted on the back of that news, with the stock last down more than 2% after 3 minutes of trading. Meanwhile, Australia’s retail turnover rose 1.4% month-on-month in October on a seasonally adjusted basis.

 

 

CURRENCY MARKET COMMENTARY

 

The rand gained on Thursday, boosted by optimism about COVID-19 vaccines that have whetted risk appetite among global investors hungry for yield. At the close the rand was 0.92% firmer at R15.18 per dollar, a one-week best. The euro was headed for its best week in a month this morning and has blown past major resistance levels as investors piled into bets the US dollar has further to fall as the world begins to emerge from the COVID-19 pandemic.

 

 

COMMODITIES MARKET COMMENTARY

 

Gold prices edged higher this morning on cautious investor optimism over additional US stimulus, while news that drug maker Pfizer slashed the target for the rollout of its COVID-19 vaccine also helped lift the allure of the safe-haven metal. Oil prices rose today, heading for a fifth week of gains, after major producers agreed to continue to restrain production to cope with coronavirus-hit demand but the compromise fell short of expectations. OPEC and Russia on Thursday agreed to ease deep oil output cuts from January by 500,000 barrels per day, failing to come to a compromise on a broader policy for the rest of next year.

LOCAL COMPANIES

Ellies (ELI) +57.1%

The JSE-listed electronics group, which manufacture, import, wholesale and distribute electrical and solar products, announced it has returned to profit for the interim period, due to improved logistics handling and improving losses from its manufacturing unit. The group expects HEPS of 2.37 cents compared to the loss of 2.91 cents previously, with revenue increasing 1.9%. The change in profit is attributed to a “substantial reduction in operating expenses attributable to the migration of the warehousing and logistics   functions to a third-party logistics provider”, the group said. Shares in the group has been extremely volatile, reaching an intra-day high of 15 cents, before closing on 11 cents.

 

Alexander Forbes (AFH) -4.3%

The financial services group reported a 3% drop in operating income from continuing operations to R1.54Bn, amid the challenging economic environment and the impact of the COVID-19 pandemic on its clients. The group slashed its interim dividend by 28% from 18 cents to 13 cents, warning the fallout of the virus will continue to impact its operations. CEO Dawie de Villiers: “Despite the tough trading conditions that the business has faced over the past six months, the core business remains stable”. Assets under administration (AUM) ticked up by 3% to R353Bn, owing to higher returns and net inflows over the period, which helped to offset the R3Bn drop in contributions from active members to their retirement funds, due to contribution holidays granted.

INTERNATIONAL COMPANIES

Dollar General (DG) -1.4%

America's biggest dollar store chain released third-quarter earnings on Thursday before the opening bell on Wall Street, beating expectations as the retailer benefitted from higher demand for cheaper groceries and household items. The discount retailer generated $8.2Bn in sales, 17.3% higher than the comparable period, narrowly beating the $8.15Bn consensus mark. “Same-store sales increased 12.2% compared to the third quarter of 2019, driven by an increase in average transaction amount, partially offset by a decline in customer traffic”, the group said in a statement. Earnings per share jumped 62.7% to $2.31, topping the $2.00 per share analysts estimated.

 

Kroger (KR) -4.4%

The largest supermarket chain in the US, Kroger’s sales jumped during the third quarter to $29.72Bn from $27.97Bn previously as online sales more than doubled, however the group still missed Wall Street’s sales estimates of $29.97Bn. The group posted net income of $631 million, or adjusted for investment gains, earned 71 cents per share, well ahead of the 66 cents analysts expected. The chain store forecasts full-year earnings in the range of $3.30 to $3.35 per share, with analysts calling for $3.30. The grocery chain reported same-store sales rose 10.9% excluding fuel sales, which topped expectations of 10.6%.

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