Taking Stock - The JSE pushed ahead to a new record yesterday.

In todays taking stock, we discuss at how the JSE pushed ahead to a new record yesterday, continuing its winning streak for six consecutive sessions.

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MARKET COMMENTARY

SOUTH AFRICA

The main indices of the Johannesburg Stock Exchange pushed ahead to a new record yesterday, continuing its winning streak for six consecutive sessions as the US stimulus hopes reinforced local positive sentiments. The benchmark All Share closed up 1.52%, while the Top 40 index ended up 1.63%. The rally was mainly driven by mining stocks led by high gold and platinum prices. The market was also boosted by hopes that the country would start vaccinations soon as the government assured on Wednesday that its vaccination programme was on schedule and it was also in advanced talks to secure more vaccines.

 

 

EUROPE

European stocks closed lower Wednesday as traders digest a slew of new corporate earnings. The pan-European Stoxx 600 finished the session down 0.23%, with most sectors and major bourses in negative territory. German Chancellor Angela Merkel announced that Germany will extend its lockdown until March 14 amid concerns over new strains of the coronavirus. Meanwhile, investors are also monitoring process on a Covid-19 stimulus package stateside.

 

 

US

The S&P 500 dipped slightly from a record high on Tuesday as the market’s strong rally in February took a pause. Investors could be taking some chips off the table following a strong rally boosted by optimism for a smooth reopening amid the COVID vaccine rollout. Cyclical sectors, which had outperformed in recent weeks, led the declines. Energy fell 1.5%, paring its month-to-date gains to 11.1%. Materials also registered losses.

 

 

ASIA

Asian stocks hit a record high today, as upbeat earnings, hopes of a large US fiscal stimulus and progress in vaccinations fanned optimism about a global recovery from the pandemic. In mainland China’s CSI300 rose 1.3% to a 13-year high and the Shanghai Composite hit a five-year high on the last trading day before the week-long lunar new year holidays.

 

 

 

 

CURRENCIES

The rand firmed on Wednesday, holding near a five-week high hit in the previous session as rising hopes of a $1.9 trillion stimulus programme in the United States elevated risk demand. At 1500 GMT, the rand ZAR=D3 was 0.41% firmer at 14.6800 per dollar. US President Joe Biden's $1.9 trillion coronavirus relief bill is expected to pass through Congress with little change despite opposition from Republicans over the aid's price tag. Analysts see the fiscal spending, coupled with continued ultra-easy Federal Reserve monetary policy, dragging down the dollar in the longer term, feeding demand for risk assets.

 

 

COMMODITIES

Gold prices edged up this morning as the dollar hovered around a one-week low and expectations of a massive stimulus package in the United States lifted bullion's appeal. Investors now await Federal Reserve Chairman Jerome Powell's speech before a virtual Economic Club of New York event later today. Oil prices rose again today, extending their more than week-long rally after industry data showing a fall in US crude oil stocks added to optimism about an expected rise in global fuel demand.

LOCAL COMPANIES

Gold Fields (GFI) +3.2%

The group advised that headline earnings per share for the 12 months ended 31 December 2020 (FY 2020) are expected to range from US$0.81-0.85 per share, 305-325% (US$0.61-0.65 per share) higher than the headline earnings of US$0.20 per share reported for the 12 months ended 31 December 2019 (FY 2019). Basic earnings per share for FY 2020 are expected to range from US$0.80-0.84 per share, 300-320% (US$0.60-0.64 per share) higher than the basic earnings of US$0.20 per share reported for FY 2019. Normalised earnings per share for FY 2020 are expected to range from US$0.98-1.02 per share, 133-143% (US$0.56-0.60 per share) higher than the normalised earnings of US$0.42 per share reported for FY 2019. The increase in basic and headline earnings is driven by slightly higher production and higher gold prices received, despite the hedges that were in place during 2020.

 

 

Standard Bank (SBK) – +0.4%

Standard Bank is interested in buying shares it doesn’t already own in its Angolan unit after an investor in the business was detained and his shares seized by authorities. “Over the last two years we have increased our stake in our subsidiaries in Kenya and in Nigeria,” Sola David-Borha, the chief executive officer of Johannesburg-based Standard Bank’s African division, said in a video call. “If the opportunity arises in Angola as well, we will do so.” A rule barring foreign companies from full ownership of businesses in Angola was in place when Africa’s largest lender opened its unit in the southern nation in 2010, but has since been scrapped for some industries. Authorities seized the assets of Carlos Sao Vicente, Standard Bank’s 49% partner in the Luanda-based division, in September amid on accusations of fraud. The action is linked to moves by President Joao Lourenco to crack down on alleged graft under his predecessor’s rule. Sao Vicente, who has been suspended as a director on the board of Standard Bank’s Angolan unit, remains in custody after prosecutors two weeks ago extended his detention period for an additional two months pending further investigations. His stake in Standard Bank was taken over by Angola’s state-asset management institute, known as IGAPE. Angola is among the top six contributors to Standard Bank’s earnings from operations on the continent outside of South Africa. A presence in 20 sub-Saharan African countries has shielded the lender from some of the pain faced in its home market, where a moribund economy and restrictions to contain the Covid-19 pandemic bankrupted businesses and pushed up unemployment.

INTERNATIONAL COMPANIES

Under Armour (UAA) +8.4%

Under Armour said Wednesday it is forging ahead with its turnaround strategy to pull its sneakers and sweat-wicking tops out of struggling middlemen and instead pour investments into its own stores and website. In 2020, Under Armour said wholesale revenue fell 25% to $2.4 billion, while direct-to-consumer sales rose 2% to $1.8 billion, driven by a 40% gain in e-commerce sales. Digital made up about 47% of direct-to-consumer revenue last year, the company said. Under Armour revealed plans late last year to break with some retailers, primarily in North America, starting in the back half of 2021, as it doubles down on its strategy to sell more directly to consumers. It has said it aims to leave 2,000 to 3,000 partner stores, although that would still leave it with 10,000 by the end of 2022. The company didn’t identify which retailers it will break ties with as part of this plan. Under Armour’s merchandise is sold in a number of US department stores, specialty sporting goods stores and off-price retail locations, in addition to mom-and-pop businesses.

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