Taking Stock - US stocks climbed on Friday.

In todays taking stock, US stocks climbed as investors hoped a disappointing January jobs report would increase the likelihood of further stimulus.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

The stock market moved up for the third consecutive day in a rally largely broad-based, taking the main index close to its all-time high seen last month. The market has been bullish in the last three days as falling coronavirus cases in the country have brightened prospects of a faster economic recovery. The benchmark All Share index closed up 0.79% (now at 64,290 index points) while the blue-chip Top-40 index ended up 0.66%.

 

 

EUROPEAN MARKET COMMENTARY

European stocks closed mixed Friday as investors looked to vaccine rollouts for hopes of normalization, while global markets flirted with record highs. The pan-European Stoxx 600 finished flat in Europe, with banks climbing 1% to lead gains and telecoms falling 0.8%. For the week, the index closed up 3.45% aided by a week-long rally in Italian assets. Corporate earnings season continued to drive individual share price movement, with BNP Paribas, Sanofi, Intesa Sanpaolo and Thyssenkrupp all reporting before the bell on Friday.

 

 

US MARKET COMMENTARY

US stocks climbed on Friday, wrapping up a strong week on Wall Street as investors hoped a disappointing January jobs report would increase the likelihood of further stimulus. The Labor Department said the US added 49,000 jobs in January, slightly below the 50,000 payrolls expected by economists. The unemployment rate fell to 6.3%, better than projections of 6.7%. December’s numbers were revised much lower, with the month posting a loss of 227,000 from the initial reading of 140,000 jobs lost. The Senate passed a budget resolution early Friday, as Democrats move forward with the process to pass a $1.9 trillion coronavirus relief bill without Republican votes.

 

 

ASIAN MARKET COMMENTARY

Shares in Asia were higher in early trade today, as investors monitored shares of China’s tech giants following the release of new anti-monopoly guidelines over the weekend. China’s State Administration for Market Regulation released a new set of rules that will likely put pressure on leading internet services in the country such as Alibaba’s Taobao or Tencent’s WeChat Pay, according to Reuters. Separately, regulators on Monday slapped a 3 million yuan (nearly $500,000) fine on Vipshop — an online discount retailer — over anti-competitive acts, Reuters said.

 

 

CURRENCY MARKET COMMENTARY

The rand firmed on Friday to end the week in the black, boosted by signs of a smaller fiscal deficit and faster procurement of COVID-19 vaccines ahead of the budget speech later in the month. At the close, the rand was 0.85% firmer at R14.85 per dollar. Slowing coronavirus infections after a second wave hit late in 2020 and better than expected tax revenues ahead of the February 24th national budget, seems to have soothed sentiment. The local currency was trading around R14.87 to the dollar this morning.

 

 

COMMODITIES MARKET COMMENTARY

Gold prices edged higher this morning, as weaker-than-expected US jobs data re-ignited concerns over a recovery in the world's largest economy, pressuring the dollar and boosting bullion's appeal. Oil prices rose today, boosted by supply cuts among key producers and hopes for further US economic stimulus measures to boost demand. Meanwhile Saudi Arabia’s pledge of extra supply cuts in February and March on the back of reductions by other members of the Organization of the Petroleum Exporting Countries and its allies, including Russia, is helping to balance global markets.

 

LOCAL COMPANIES

MTN Group (MTN) +5.6%

MTN said profit may have almost doubled last year after the sale of stakes in telecom-tower joint ventures in Ghana and Uganda boosted the bottom line. The stock gained as much as 10%, the most in three months. Earnings per share may have increased by as much as 95% to R9.87 in 2020, Africa’s biggest wireless carrier by sales said in a statement on Friday. The Johannesburg-based company is scheduled to report more detailed results on March 10. MTN has been selling assets to streamline the company and pay down debt, and has a target of raising R25 billion over the next three-to-five years. The carrier exited stakes in the Ghana and Uganda tower assets last year, and has also offloaded a minority interest in e-commerce group Jumia Technologies AG. Next up may be the sale-and-leaseback of the company’s South African towers, according to people familiar with the matter. The earnings gain takes into account impairments related to units in Syria and Yemen, which are also up for sale, as well as Liberia and Guinea-Bissau. Headline earnings per share, which exclude one-time items, are expected to have risen by as much as 70%.

 

Northam Platinum (NHM) +1.1%

 

Northam Platinum is considering making an offer for the mothballed Bokoni mine as it seeks to expand output and capitalise on a rally in platinum-group metal prices, according to three people familiar with the plan. South Africa’s fourth-biggest platinum producer has evaluated a bid for Bokoni but no final decision has been taken and the company is yet to conduct due diligence, said the people, who asked not to be identified as the proposal hasn’t been made public. Bokoni is jointly owned by Anglo American Platinum Ltd. and Atlatsa Resources Corp. Northam is seeking to boost output amid a bullish outlook for the metals, which are used to extract pollutants from vehicle exhaust fumes, said the people. Siyanda Resources Ltd. was also looking at buying Bokoni. Business Day earlier reported the interest of the two companies. Rhodium and palladium prices have surged with demand for the metals rebounding to the levels it was at before the coronavirus outbreak as China’s economy gains momentum.

INTERNATIONAL COMPANIES

Estee Lauder (EL) +7.8%

Estee Lauder saw sales increase for the first time since the coronavirus pandemic upended global economies nearly a year ago, snapping a string of three straight quarterly declines on the top line. Shares of the New York-based cosmetics company had their biggest day of trading since March after revenues grew 5% in the holiday quarter, beating both management’s and Wall Street’s expectations. Estee Lauder reported $4.85 billion of sales in its fiscal second quarter and earnings per share of $2.61, above analyst estimates of $4.49 billion on the top line and $1.69 EPS. The beauty brand had issued guidance for about $4.48 billion of revenue on the high end. In an interview Friday on CNBC, CEO Fabrizio Freda said skin care sales, e-commerce and Asian markets were key drivers. “Consumers are using more skin care,” he told Jim Cramer, host of “Mad Money.” “During the pandemic when most of us are working from home, closed in our homes, we have time to pamper, we need more skin care benefits. This is working around the world, particularly in Asia.” Estee Lauder’s business in the Asia/Pacific region more than made up for the lost sales around the rest of the globe. Though year-over-year sales plummeted 14.5% in the Americas and 2.4% in Europe, the Middle East and Africa, the company grew 34.6% in the Asia market. Sales rebounded in the region after initially dipping in the January-March quarter of 2020, the first period affected by the coronavirus pandemic. Second-quarter sales in the Americas dropped to $1.05 billion from $1.23 billion a year ago.

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