Taking Stock - Markets rejoice on a vaccine candidate from Pfizer

Daily insights and analysis on stocks.

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Market Performance

SOUTH AFRICA

  • The stock exchange propelled to its highest level since on drugmaker Pfizer’s announcement that its trial vaccine has been highly effective in preventing COVID-19.
  • The markets went into a frenzy with both the stock exchange and local currency posting big gains immediately after the announcement.
  • The benchmark all share index was up 1.63% to 57,307, while the top 40 companies index closed up 1.56%.
  • The rally was led by South African banks with the index up almost 9%.
  • Gold stocks took a major hit with gold price correcting by 4.5% and pushing the gold index down by 15%.

EUROPE

  • European stocks closed sharply higher on Monday as markets around the world made gains following Joe Biden’s projected election win and positive vaccine news from Pfizer.
  • The pan-European Stoxx 600 closed up by 4%, with banking stocks surging more than 12% to lead gains as all sectors except healthcare, and all major bourses, traded in positive territory.
  • The oil, insurance, media and travel sectors also saw strong gains.
  • In terms of individual share price action, airplane engine manufacturer Rolls-Royce surged nearly 44%, while cruise operator Carnival jumped almost 38% to lead a broad rally for travel stocks on the vaccine news.

ASIA

  • Airline stocks in Asia soared this morning, while markets in the region traded mixed as investors in the region reacted to positive developments overnight on the coronavirus vaccine front.
  • The sector has been among that hardest hit by the coronavirus pandemic as a result of travel restrictions.
  • China’s consumer price index rose 0.5% in October from a year ago, according to data from the country’s National Bureau of Statistics, as compared to expectations for a 0.8% increase in a Reuters poll.
  • The producer price index for China declined 2.1% year-on-year in October, close to expectations in a Reuters poll of a 2% slip.

UNITED STATES

  • The Dow Jones Industrial Average and S&P 500 jumped on Monday as investors cheered trial data from drugmakers Pfizer and BioNTech indicating their COVID-19 vaccine is more than 90% effective.
  • However, the Nasdaq Composite closed lower by 1.5% at 11,713.78 as traders rotated out of high-flying technology names that outperformed during the pandemic into more beaten-down value stocks.
  • The vaccine announcement was seen on Wall Street as a sign that the pharmaceutical industry may soon have a viable way to control a disease that has derailed the US economy for much of 2020.

CURRENCIES

  • The rand, already strengthened by Joe Biden’s election victory, went past its 8-month peak on hopes of an early vaccine.
  • At the close, the rand traded at R15.38 against the US dollar, 1.41% firmer than its previous close on Friday.
  • The unit was trading at its strongest since March 5, which was before the COVID-19 pandemic knocked the local economy deeper into recession.
  • The rand was trading around R15.42 this morning.
  • The yen scraped back some losses against the US dollar on Tuesday, after the safe currency took a drubbing on news of the development of a coronavirus vaccine which raised optimism of a global economic recovery.

COMMODITIES

  • Gold prices edged higher in early Asian trade today after falling as much as 5.2% in the previous session, as hopes of more US stimulus measures to weather the impact of rising COVID-19 cases nudged investors towards the precious metal as an inflation hedge.
  • Oil prices dropped this morning as concerns over fuel demand in the near term in coronavirus-hit Europe and the United States returned to haunt the market after an overnight surge on progress towards a COVID-19 vaccine.

Domestic Company News

HARMONY (HAR) -17.4%

  • The dual-listed South African gold miner delivered a 38% QoQ improvement on its gold production for the first quarter of its 2021 financial year, owning to a recovery in production following the COVID-19 related trading restrictions in the 2020 full-year.
  • The miner benefited from a 5.4% increase in the rand per kilogram price of the precious metal to R922 398/kg ($1,698/oz, some 12% higher) QoQ, while all-in sustaining costs (AISC) were 7% lower at R728 465/kg ($1 341/oz) compared to the previous period.
  • CEO Peter Steenkamp: “A solid operational performance, further aided by the gold price, has significantly our balance sheet, allowing us to achieve an operating free cash flow margin of 20%”.

MULTICHOICE (MCG) +1.7%

  • Africa’s largest pay-tv operator announced on Monday its core HEPS for the interim period end-September will jump between 40% and 45% compared to the corresponding period last year.
  • “The improved financial performance for the current period was achieved despite continued macro-economic headwinds across the continent, including the impact of COVID-19 which especially depressed advertising revenues and commercial subscription revenues”, the group said in a statement.
  • The group’s trading profit is expected to be between 15% and 20% higher than the R4.8Bn than previously.

Global Company News

PFIZER (PFE) +7.7%

  • US pharma group announced the COVID-19 vaccine candidate being developed in conjunction with BioNTech, has showed to prevent more than 90% of infections during ongoing Phase 3 trials, which includes thousands of test subjects, the most encouraging evidence yet in the fight against the coronavirus.
  • “This is about the best the news could possibly be for the world and for the US and for public health,” said William Gruber, Pfizer senior vice-president for vaccine clinical research and development. Based on supply projections, the pharma group said they expect to supply up to 50 million vaccine doses globally in 2020, and up to 1.3 billion doses in 2021.
  • "The first set of results from our Phase 3 COVID-19 vaccine trial provides the initial evidence of our vaccine's ability to prevent COVID-19," Pfizer Chairman and CEO Albert Bourla said in a statement.

MCDONALD'S (MCD) -1.5%

  • The fast-food giant known for its French fries and Big Macs reported better-than-expected Q3 results, as promotions in the US fuelled a sales recovery, as drive-thru traffic and digital orders surged.
  • The group posted net income of $1.76Bn, or $2.35 per share, up from $1.61Bn, or $2.11 per share, a year earlier topping the $1.90 per share expected by analysts.
  • Overall sales slipped 2% to $5.42Bn, beating expectations of $5.4Bn, as same-store sales fell 2.2% in the period, dragged down by slower recovery in its international markets.
  • The group will increase its quarterly cash dividend by 3% to $1.29 per share.
  • “The resilience of the McDonald's system was on display during the third quarter as the competitive strength of our business and the 3 D's – Digital, Delivery and Drive Thru – led to significant global comparable sales recovery," CFO Kevin Ozan said in a statement.

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