Taking Stock - The rand weakened on Thursday.

In todays taking stock, we look at how the rand weakened on Thursday as focus shifted to bleak economic prospects for Africa’s most industrialised economy.

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MARKET COMMENTARY

SOUTH AFRICA

Shares on the Johannesburg Stock Exchange, ended the day a tad higher and stayed largely stable on positive momentum across emerging market equities. The benchmark all-share index closed up 0.31% and the blue-chip top 40 index ended up 0.27%. Banks continued to rise, with the banking index climbing 0.16%. The index has gained almost 25% this month on a rally in emerging market equities following positive news about a COVID vaccine. The gold index, which has shed 18% this month, ended 2.42% higher. South Africa’s fifth-biggest retailer Mr Price Group jumped 8.4% and was the top mover on the JSE as the company forecast strong growth and reinstated dividends.

 

 

EUROPE

European stocks closed little changed on Thursday as investors paused for breath after a global rally in recent sessions. The Europe Stoxx 600 index ended 0.03% lower. US financial markets were closed Thursday due to the Thanksgiving holiday so trading volumes were low. Looking at individual stocks, shares of insurer Aviva fell 0.2% lower after the British insurer said that it expects to pay a total dividend for 2020 of 21 pence (28 cents) and is exploring options for divesting its remaining businesses in Asia and continental Europe in order to focus on Britain, Ireland and Canada.

 

 

US

US financial markets were closed Thursday due to the Thanksgiving holiday.

 

 

ASIA

Asian shares stalled near record highs this morning as investors weighed renewed doubts about a highly-anticipated coronavirus vaccine against hopes that some of the region’s economies will recovery quicker than their Western peers. Shares in China rose 0.37% after data showed Chinese industrial profits hit a nine-year high. South Korean stocks also rose 0.05%. Several scientists have raised doubts about the robustness of results showing the shot was 90% effective in a sub-group of trial participants who, by error initially, received a half dose followed by a full dose.

 

 

 

 

CURRENCIES

The rand weakened on Thursday as focus shifted to bleak economic prospects for Africa’s most industrialised economy. The rand was trading at R15.19 versus the dollar at the close, 0.47% weaker than its previous close. The rand has in recent weeks been supported by an uptick in global risk appetite, which has hurt the dollar. It has gained 7% against the US currency this month. But focus has once again shifted to South Africa’s frail economic fundamentals.

 

 

COMMODITIES

Gold prices steadied on Friday as investors took stock of doubts raised over the efficacy of an inexpensive coronavirus vaccine, but the precious metal was set for a third week of declines. Gold was down over 3% for the week as progress in COVID-19 vaccine development and U.S. President-elect Joe Biden's transition to the White House bolstered risk sentiment. Oil prices were mixed today in quiet trade due to the US Thanksgiving holiday, with West Texas Intermediate (WTI) dropping more than 1% amid concerns about oversupply and doubts about a vaccine to end the coronavirus pandemic.

LOCAL COMPANIES

FirstRand (FSR) +0.7%

The South African banking group warned on Thursday, interim profits could tumble by as much 25%, as the COVID-19 pandemic continues to impact its operations and clients. “Whilst the first four months of the financial year are better than expected, the group remains cautious on the sustainability of this rebound. Significant uncertainties remain in the system which may play out in the first six months of 2021”, the bank said in a statement. However, the group said revenue improved more than expected, as non-interest income, especially from trading picked up, while is tier one capital levels ticked up.

 

Mr Price (MRP) +8.4%

The clothing, sports goods and homeware retailer reported a 24.8% drop in HEPS for the 26 weeks ended 26 September, a period defined by the national wide hard lockdowns. The retailer estimated it lost R1.8Bn in sales in the month of April during level 5 as store were forced to be close in an attempt to stop the spread of the virus. On the bright side, online sales jumped 71.5% during the period, although e-commerce still only account for 2.5% of total sales the group’s digital strategy is encouraging. The group also announced it will do its first acquisition since 1990, with the purchase of family-owned Power Fashion and its 170 locations in Southern Africa for an estimated value of R1.6Bn by analysts. “Power Fashion merchandise is fashionable, but not fashion forward. It focuses on the deep value segment of the market and its price positioning is strongly aligned to its target customer base,” the group said.

INTERNATIONAL COMPANIES

Amazon (AMZN) +2.2%

The technology group is facing scrutiny from labour unions regarding better pay and working conditions. Nearly 2500 employees in Germany started a three-day strike on Thursday, as the employees and unions aim to disrupt black Friday. The Verdi trade union in Germany is having its workers strike across seven facilities under the “Make Amazon Pay” campaign, an assembly of organised labour, human rights organisations, environmentalists and other groups that are demanding changes at the e-commerce giant. The group is working “to make a positive affect as a progressive, innovative and sustainable business” for customers, partners and employees, the company said in an e-mailed statement.

 

Slack (WORK) +37.6%

Shares in the business communication platform surged more than 35%, after speculation broke Salesforce is interested in acquiring the group, with shares in Salesforce slipping 5% on investor caution. “It helps both Salesforce.com and Slack compete more aggressively with Microsoft”, Bloomberg analyst Anurag Rana said. The companies could reach a deal within days, a person familiar with the matter said, and the deal with merge unite a software giant with a buzzy newcomer, on a mission to replace email.

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Media, Sasfin Wealth

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