Taking Stock - The Hilton hotel posted better-than-expected.

In todays taking stock, we look at how The Hilton hotel and resort operator posted better-than-expected Q3 earnings on Wednesday, even as the global pandemic continues to batter the leisure and travel industry.

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MARKET COMMENTARY

SOUTH AFRICA

Local shares continued their advance on the Johannesburg Stock Exchange for a third consecutive day on Wednesday as uncertainty over the US elections and the probability of Trump's win bolstered markets worldwide. The All Share index closed up 0.88% to 53,656, while the Top 40 index ended 0.92% higher. The banks however bucked the trend and halted their two-day winning streak with the bank index slipping 0.18%. South Africa's government bonds gained, with the yield on the 2030 bond down 5 basis points to 9.27%.

EUROPE

European stocks closed higher on Wednesday as investors around the world kept watch on the results of the US election. Following a turbulent open, the pan-European Stoxx 600 ended up around 1.9%, with healthcare stocks jumping almost 4.8% to lead the gains. On the data front, final euro zone purchasing manager’s index (PMI) readings for October came in at 50.0, down from 50.4 in September, indicating that the bloc’s economy stalled as coronavirus cases resurged across the continent.

US

US shares rallied as investors bet the closer-than-expected results reduced the chance of big changes for business. Tech and health firms, now seen as less likely to face new regulation, led the gains. Facebook shares rose more than 8%, while several major health insurance firms saw double-digit jumps. With millions of votes still to be counted, President Donald Trump and his challenger, Democrat Joe Biden, are neck and neck in key swing states. Against some expectations, however, the uncertainty over the outcome did not appear to worry US financial markets.

ASIA

Stocks in Asia were higher in early trade today as investors continue to wait for the result of the US election. Hong Kong’s Hang Seng index led gains among the region’s major markets as it surged 1.96%, with shares of Alibaba listed in the city up nearly 4%. Meanwhile, shares in Australia rose, with the ASX 200 gaining 1.19%. Australia’s exports of goods and services rose 4% month-on-month in September on a seasonally adjusted basis.

CURRENCIES

The rand recovered against the dollar on Wednesday afternoon, as global markets whipsawed amid a far closer US presidential election than polls had predicted. At the close, the rand was at R15.86 per dollar, 1.15% stronger than its previous close after trading more than 1% weaker against the US currency in the morning session. Currency markets swung wildly as votes were counted, with President Donald Trump winning in some battleground states but a final result is still days or even weeks away. The local currency was trading around R15.89 this morning.

COMMODITIES

Gold prices were little changed this morning after early US election results suggested a lead for Democrat contender Joe Biden, even as the possibility of a contested result remained. Investors increasingly expect the Republican and Democratic parties to retain their respective control of the Senate and the House of Representatives, dimming the prospect of higher taxes and financial regulation even under a Biden win. US oil prices dropped today as the dollar strengthened on growing expectations Democrat Joe Biden would win the US presidential election but the Republicans would retain Senate control, holding back any huge COVID-19 relief package.

LOCAL COMPANIES

Mr Price (MRP) +1.8%

The clothing and homeware retailer released a 26-week trading statement after the bell, warning shareholders that interim HEPS is likely to drop by as much as 28% compared to same period last year. “The closure of all the group’s South African stores during the nation-wide lockdown between 27 March 2020 and 30 April 2020, and the subsequent trade restrictions due to COVID-19, has had a material impact on the group’s earnings”, the retailer said in a statement, adding the group lost approximately R1.8Bn in sales. Clients continues to favour cash transactions, totalling 86% of total sales, however the retailer had to increase the impairment of its debtor’s book to 15.2%, due to the current challenging economic conditions.

JSE (JSE) – +1.8%

The operator of the Johannesburg Stock Exchange (JSE), previously received approval from the Competition Tribunal to acquire a majority stake in Link Market Services South Africa (Link SA). The group announced that all conditions precedent to the transaction have been fulfilled. The JSE acquired a 74.85% shareholding in Link SA for a cash amount of R243.6 million, with Link SA’s Black Economic Empowerment (BEE) shareholder retaining the remaining 25.15%. Link SA is the second largest share registry business in South Africa, and will in due course be renamed JSE Investor Services, the group said in a statement

INTERNATIONAL COMPANIES

Hilton (HLT) +2.7%

The hotel and resort operator posted better-than-expected Q3 earnings on Wednesday, even as the global pandemic continues to batter the leisure and travel industry. The group reported adjusted earnings of $17 million or 6 cents per share, compared to the $301 million or $1.05 per share in the previous year, with analysts expecting a loss of 4 cents. The leisure group generated revenue of $933 million, down from $2.4Bn a year ago and below the $963.5 million estimated. CEO Christopher Nassetta: “The vast majority of our properties around the world are now open and have gradually begun to recover from the limitations that the COVID-19 pandemic has imposed on the travel industry.”

BMW (BMW) +0.6%

The German automaker, Bayerische Motoren Werke, posted a 10% jump in third quarter profit, thanks to strong Chinese demand for luxury cars. China accounted for 34% of all BMW's new car deliveries in the third quarter, followed by Germany on 13% and the US on 12%. The carmaker however warned a second wave of COVID-19 infections sweeping across Europe and the US posed a significant risk to its operations, adding “the risk exposure could be considerable, particularly on the demand side”. The group said earnings before interest and taxes (EBIT) fell 16% to €1.92Bn ($2.2Bn), missing the consensus mark of €1.99Bn.

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Media, Sasfin Wealth

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