Taking Stock - The Nasdaq fell on Wednesday.

In todays taking stock, we discuss how the Nasdaq fell on Wednesday led by a slide in big technology firms as investors rotated out of growth stocks.

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MARKET COMMENTARY

SOUTH AFRICA

Local retreated on profit booking that occurred across global markets but remained near record highs on global economic recovery optimism and as South Africa started its COVID-19 vaccination drive. The benchmark All-Share index dropped 0.17% at day's close, while the blue-chip Top-40 index slipped 0.06%. The biggest drop was seen in gold-mining companies with the index shedding over 5% of its gains in the day on lower gold prices.

 

 

EUROPE

European stocks closed lower on Wednesday as investors monitored rising bond yields stateside and the outlook for inflation. The pan-European Stoxx 600 ended the session down 0.7%, with retail sinking 3.1% to lead losses as most sectors and major bourses slid into negative territory. On the data front, U.K. inflation growth surprised to the upside in January, rising by 0.7% in annual terms on the back of higher food prices and lower discounting of household goods.

 

 

US

The Nasdaq fell on Wednesday led by a slide in big technology firms as investors rotated out of growth stocks, while awaiting the release of minutes from the US Federal Reserve’s January meeting later in the day. Shares in Apple Inc, Tesla Inc and Microsoft Corp fell between 1.0% and 2.5%, weighing the most on the tech-heavy index. The S&P 500 technology sector fell 0.9%, while the communication services sector dropped 0.1%. Rising inflation expectations pushed benchmark 10-year US Treasury yields to their highest in a year on Wednesday.

 

 

ASIA

Stocks in Asia were mixed in early trade today, as investors watched movements in mainland Chinese stocks as they returned from the Lunar New Year holiday. Australia’s unemployment rate decreased to 6.4% in January, according to seasonally adjusted estimates released Thursday by the country’s Bureau of Statistics. That compared against December’s unemployment rate of 6.6%.

 

 

CURRENCIES

The rand weakened on Wednesday, extending losses for a second day, as global risk demand diminished and some investors took profits on the local currency's recent rally. At the close, the rand was 0.29% weaker at 14.7100 per dollar, following a rally to a one-year best earlier in the week as investors betting on a faster global economic recovery chased the high yield on local assets. But overnight trade saw investors reassess bets on the pace and distribution of a global recovery. Signs of further economic activity and inflation in the United States prompted fresh demand for the dollar and US bonds.

 

 

COMMODITIES

Oil prices rose as much as a dollar this morning, extending this week’s gains and hitting 13-month highs, as a cold snap sweeping Texas and surrounding regions shut at least a fifth of US refining output and a million barrels of crude production. Gold prices inched up today, recovering from a more than two-month low hit in the previous session as US Treasury yields retreated, although a stronger dollar kept bullion's gains in check.

LOCAL COMPANIES

Tiger Brands (TBS) +1.0%

South Africa’s biggest food producer Tiger Brands said on Wednesday it expected headline earnings from continuing operations in the six months to March 31 to rise as much as 20%, a bounce back after a decline reported in its full-year results. The owner of popular brands Jungle Oats and Tastic rice said headline earnings per share (HEPS), the main profit measure in South Africa, is expected to be between 10% and 20% higher in the period, the firm’s first half, compared with 611 cents reported in the same period last year. Including its now sold value-added meat products business, HEPS is seen rising as much as 45%.

 

Emira (EMI) -1.6%

Mid-cap JSE-listed real estate investment trust (Reit) Emira Property Fund on Wednesday reported a 13.9% decline in distributable earnings for its half-year to the end of December 2020. However, the group declared an interim dividend of 52 cents per share (cps), despite the impact of the Covid-19 pandemic on its retail, office and industrial properties. The interim dividend is 22.1 cents lower than its corresponding 2019 half year. Emira, which has a total property and investment portfolio of almost R13 billion – including retail investments in the US – going ahead with an interim dividend comes as some of its other SA Reit peers have opted to withhold paying out interim and even full-year dividends. “Distributable earnings for the six months ended December 31, 2020 has decreased from the prior corresponding period by 13.9% to R333.7 million,” the group noted in its interim results statement on Sens. The group, however, pointed out that the interim dividend comes “after the deferral of 5.09 cents of the available cash backed dividend per share” to the second half of the year. It explained that the deferral “is prudent given the uncertainty on the future operational performance” considering Covid-19.

INTERNATIONAL COMPANIES

Facebook (FB) -0.2%

Facebook has blocked Australian users from sharing or viewing news content on the platform, causing much alarm over public access to key information. Australians woke up on Thursday to find the Facebook pages of all local and global news sites were unavailable. Several government health, emergency and other pages were also blocked on Thursday - something the tech giant later asserted was a mistake. Australia's government said the ban threatened Facebook's "credibility". Those outside of Australia are also unable to read or access any Australian news publications on the platform. Facebook's move is in response to a proposed law in Australia which would make tech giants pay for news content. Companies like Google and Facebook have argued the law doesn't reflect how the internet works, and unfairly "penalises" their platforms. The Australian government has said it is proceeding with the law, which passed parliament's lower house on Wednesday. "Facebook needs to think very carefully about what this means for its reputation and standing," Communications Minister Paul Fletcher told the ABC. Facebook's action came hours after Google agreed to pay Rupert Murdoch's News Corp for content from news sites across its media empire.

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Media, Sasfin Wealth

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