Taking Stock - US stocks rose.

In todays taking stock, we look at how the US stocks rose as traders weighed Joe Biden’s potential $1.9 trillion stimulus package and more good vaccine news.

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MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

Stocks on the JSE rose yesterday as the JSE All-Share index added 0.65% (now at 63,885 index points) and the Top 40 index closed 0.68% firmer. Industrials contributed the most yesterday, as the local Indi 25 gained 1.53%. In other news, Eskom has announced that it is implementing Stage 2 load shedding from 12:00 yesterday until Sunday at 23:00. Meanwhile, analysts are pencilling in a 25-basis point cut at the Reserve Bank's monetary policy meeting that ends on January 21st, as the local economy was in need of stimulus.

 

 

EUROPEAN MARKET COMMENTARY

European stocks closed higher Thursday as hopes of substantial fiscal stimulus from the incoming US administration and positive Covid-19 vaccine news boosted sentiment. The pan-European Stoxx 600 ended the session up by 0.7%, with travel and leisure shares climbing 1.9% to lead gains while utilities slid 0.4%. European markets started the trading day on a cautious note, as investors monitored the ongoing battle with a rise in coronavirus cases. Vaccination rollouts across the continent have raised hopes that an end to the pandemic is on its way.

 

 

US MARKET COMMENTARY

US stocks rose yesterday as traders weighed a potential big economic stimulus package and more good vaccine news versus pressure from weak economic data and political turmoil. President-elect Joe Biden outlined a $1.9 trillion stimulus package proposal on Thursday, saying bold investment was needed to jump-start the economy and accelerate the distribution of vaccines to bring the coronavirus under control. However, investors also digested worse-than-expected jobless claims data. First-time claims for unemployment insurance jumped to 965,000 last week, higher than an estimate of 800,000 new claims, according to economists surveyed by Dow Jones.

 

 

ASIAN MARKET COMMENTARY

Asian markets were mostly lower in Friday trade as investors regionally reacted to the release of US President-elect Joe Biden’s $1.9 trillion coronavirus rescue package. Shares of Chinese smartphone maker Xiaomi plunged in Friday trade after US President Donald Trump’s administration placed the firm on a blacklist of alleged Chinese military companies.

 

 

CURRENCY MARKET COMMENTARY

The rand dipped early on Thursday, as some analysts predicted the central bank would cut its main lending rate next week to support the economy. At the close, the rand traded at R15.10 versus the dollar, roughly 1.1% weaker than its previous close. Recent data including car sales and manufacturing output suggest that Africa's most industrialised economy was performing poorly in the fourth quarter of 2020.

 

 

COMMODITIES MARKET COMMENTARY

Oil prices were mixed this morning as strong import data from China, the world’s biggest crude importer, that boosted sentiment earlier ran into concerns about Chinese cities in lockdown due to coronavirus outbreaks. Gold rose today as US President-elect Joe Biden unveiled a massive stimulus plan, while US Federal Reserve Chair Jerome Powell's commitment to keep monetary policy dovish further boosted the metal's appeal.

LOCAL COMPANIES

Steinhoff (SNH) -0.8%

The embattled group announced an update on the implementation of its proposal to resolve the various multi-jurisdictional legacy litigation and claims against it. As previously stated, implementation of the proposed global settlement requires a co-ordinated series of steps to be taken in the relevant jurisdictions. The key short-term next steps are expected to be as follows:

 

  • English Scheme sanction hearing to take place on 26-27 January 2021
  • Approval of the final form finance documents
  • South African directions hearing in respect of SIPHL section 155 scheme: An ex parte hearing is scheduled for 21 January 2021 in the Western Cape High Court, at which the group will seek certain procedural directions prior to a decision to launch a scheme of arrangement under section 155 of the South African Companies Act to implement the global settlement proposal

 

By way of further update, a hearing has been scheduled for 8 February 2020 in the Amsterdam District Court following a recent request by Conservatorium Holdings LLC to appoint a restructuring expert to Steinhoff. Steinhoff’s view remains that the global settlement, as proposed, provides the means to substantially resolve the historical claims against it and remains firmly in the best interests of all stakeholders.

 

Pick n Pay (PIK) -0.8%

Richard Brasher, the chief executive of South Africa’s Pick n Pay Stores, will retire with effect from April 21 after eight years at the helm, the grocer said on Thursday. Basher will be succeeded as CEO by Pieter Boone, former Chief Operating Officer of German retailer Metro AG. According to Pick n Pay’s statement Pieter Boone (53), a Dutch national living in The Netherlands, has spent the majority of his career to date in senior roles in Metro AG, a leading international business in the food and hospitality sector, and SHV Holdings NV, one of the world’s largest private trading groups, which includes the major Makro Cash & Carry wholesale business. The Makro business was acquired by Metro and Pieter moved across to Metro. An application for the necessary work permit for Pieter has been submitted for approval. Chairman Gareth Ackerman said Brasher has led a remarkable turnaround in the company, and that the group “is immeasurably stronger now than when Richard took over in 2013.”

INTERNATIONAL COMPANIES

Xiaomi (1810) -13.2%

The Trump administration has added smartphone maker Xiaomi to a blacklist of alleged Chinese military companies. Hong Kong-listed shares of the Chinese firm were down 10.6% at the open this morning on that news. Beijing-based Xiaomi was the world’s third-largest smartphone maker in the third quarter of 2020, according to Counterpoint Research. The move means that Xiaomi is now subject to a November executive order restricting American investors from buying shares or related securities of any companies designated by the Department of Defense to be a Chinese military company. Trump’s initial executive order was subsequently expanded to force investors to divest, or sell out, of affected holdings, by Nov. 11 this year.

 

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Media, Sasfin Wealth

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