Taking Stock - the UK is the first to authorize COVID-19 vaccine.

The UK on Wednesday became the first country in the world to authorize the Pfizer-BioNTech coronavirus vaccine, boosting UK market sentiment.

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MARKET COMMENTARY

SOUTH AFRICA

Local stocks rose along with global markets on the prospect of a coronavirus vaccine and additional US economic stimulus. The All-Share index rose 1.34%, while the Top 40 index closed up 1.36%.  Yesterday, a South African Labour Appeal Court reserved judgment on a public sector wage dispute that has big implications for government efforts to arrest soaring debt. The platinum sector which rose 5.38% was among the gainers, with Impala Platinum up 4.42% and Northam Platinum 5.03% stronger. Tongaat Hulett's shares surged 17.32% after the sugar producer said it expected to swing to an interim headline profit driven by its turnaround strategy.

 

 

EUROPE

European stocks closed mostly lower on Wednesday after a record rally last month, though UK shares got a boost following news of the country’s approval of a coronavirus vaccine. The pan-European Stoxx 600 closed 0.1% lower, with most sectors and major bourses in negative territory. Britain’s FTSE 100 index, however, climbed over 1.2%. The UK on Wednesday became the first country in the world to authorize the Pfizer-BioNTech coronavirus vaccine, making it available from next week. Meanwhile, Brexit discussions continue in a pivotal week for the UK and the EU’s future trading relationship.

 

 

US

The S&P 500 rose slightly on Wednesday, eking out another record closing high, as traders digested the latest developments surrounding a new round of US fiscal stimulus negotiations. Energy and financials were the best-performing sectors in the S&P 500, advancing 3.2% and 1.1%, respectively. Boeing led the Dow higher with a gain of 5.1%. However, Boeing’s pop was slightly offset by an 8.5% drop in Salesforce after the cloud company confirmed its acquisition of messaging platform Slack for $27.7 billion. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a joint statement Wednesday that the bipartisan bill unveiled on Tuesday should be used as “basis for immediate bipartisan negotiations.”

 

 

ASIA

Stocks in Asia were little changed this morning as investors reacted to the release of a private survey on China’s services sector activity in November. Over in Australia, the S&P/ASX 200 rose 0.38%. Australia’s seasonally adjusted balance of goods and services saw a surplus of AUS$7.456 billion in October (approx. $5.52 billion), according to the country’s Bureau of Statistics. That was higher than an expected surplus of 5.8 billion Australian dollars in a Reuters poll.

 

 

CURRENCIES

The rand weakened on Wednesday after a recent global rally in risk currencies lost steam and as a local dispute between the government and public sector unions over wage increases kept investors cautious. At the close, the rand was 0.64% weaker at 15.3450 per dollar, again reversing gains from the previous session in erratic trade this week, worsened by thinning volumes as traders wind down activities going into year-end. The rand has defied a slew of negative economic data, including credit rating downgrades two weeks dragging the country's debt deeper into junk territory.

 

 

COMMODITIES

Gold prices edged lower this morning as news of the world’s first vaccine approval from Britain underscored hopes of a swift economic recovery, weighing on bullion’s safe-haven demand, while investors kept a close eye on potential US stimulus. Oil prices fell today as producers including Saudi Arabia and Russia locked horns over the need to extend record production cuts set in place in the first wave of the COVID-19 pandemic. OPEC will resume discussions today to agree on policies for 2021 after earlier talks produced no compromise on how to tackle weak oil demand amid a new coronavirus wave.

LOCAL COMPANIES

Tongaat (TON) +17.3%

Shares in the South African sugar producer surged on Wednesday to a near seven-month high, after the group said it managed to return to profit during the interim period end-September. “This result is due to an excellent performance from all the sugar operations and good overall business momentum, which reflects continued progress with the business turnaround strategy”, the group said in a statement. Operating profit jumped 70% to R500 million, boosted by cost containment, a weaker rand, improved exports and better prices. The group expects to report headline earnings of between R158 million and R189 million, and managed to reduce debt by 7.6% to R10.9Bn as it continuous to improve its balance sheet.

 

EOH (EOH) -3.6%

The embattled JSE-listed technology group made a significant improvement in the full-year, as the business managed to reduce its headline loss per share by 72% to 495 cents from a 1751 cents loss previously. Overall revenue dropped 25% to R11.3Bn, due to the impact of the global COVID-19 pandemic, however the group lowered its debt levels by 20% to R2.6Bn, with cash on hand of R946 million. Since CEO Stephan van Coller joined the group two years ago, his top priority was steering the business through a devastating fraud scandal and lowering the group’s debt. “Notwithstanding the current unprecedented market conditions, EOH is beginning to realise the benefits of its turnaround strategy”, he said.

INTERNATIONAL COMPANIES

Snowflake (SNOW) -4.2%

One of the hottest IPO’s of the year, the cloud-data software maker released its first quarterly results as a public company on Wednesday, with shares dropping as much as 8% in after-hours trading. The group’s revenue grew 119% in the third-quarter to $159.6 million and losses narrowed from 192 cents to a loss of 101 cents, however gross margins were weaker to 58.2%. The tech group guided to Q4 revenue of $162 million and $167 million, which represent a 97% to 103% YoY jump. CEO Frank Slootman: "The period was marked by continued strong revenue growth coupled with improving unit economics, cash flow, and operating efficiencies”.

 

Royal Bank of Canada (RY) -0.6%

Canada’s biggest lender posted a small increase in quarterly profit that topped analysts’ expectations, driven by a strong capital markets division and lower bad loan provisions. Total net income rose to C$3.25Bn ($2.51Bn) from C$3.21Bn, with adjusted EPS coming in at 227 cents, ahead of the 205 cents forecasted. Profits in its personal and commercial banking unit, its largest unit, slipped to C$1.5Bn from C$1.62Bn, due to higher technology and COVID-19 related costs. The bank benefitted from a boom in trading activity during the market turmoil, boosting net income in the unit to C$840 million or a 44% jump. CFO Rod Bolger: “As the economy opens up and the vaccines take hold, we would expect credit-card spending to improve through the course of next year”.

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