Taking Stock

Daly insights and analysis on stocks.

article image

Market Performance

SOUTH AFRICA 

  • Local stocks fell along with global markets, with the benchmark Top 40 index down 1.05% and the All Share index closing 0.98% lower and is now at 54,844 index points.
  • Gold shares shed 1.74% after the bullion price weakened as hopes faded for a US fiscal stimulus package before the presidential election.
  • AngloGold Ashanti closed down 2.49% at R452.30 and Harmony Gold dropped 1.68% to R96.85.
  • Among the fallers, bourse heavyweight Naspers weakened 1.53% to R3,094.75 after losses in Hong Kong technology giant Tencent, in which it has a stake.
  • Bonds firmed, with the yield on the benchmark government issue due in 2030 down 2 basis points to 9.42%.

EUROPE

  • European stocks closed sharply lower on Thursday as hopes that a US stimulus package would be agreed before the November election waned, and as public health restrictions returned across Europe due to a surge in coronavirus infections.
  • The pan-European Stoxx 600 closed down by 2.1%, with oil and gas shares plunging 3.1% to lead losses.
  • All sectors and major bourses slid into negative territory. Meanwhile in the UK, the government announced stricter coronavirus measures in London in an effort to stem the rapid spread of the disease.
  • Global equity markets are under pressure as traders continue to weigh the prospects for a coronavirus aid deal being reached before the Nov. 3 election.

ASIA

  • Stocks across Asia were mostly subdued in early trade on Friday, with dampened sentiment on the coronavirus front. In Australia, the S&P/ASX 200 was also close to the flatline.
  • Shares of telecom company Aussie Broadband had their debut on the ASX, and rose as much as 2.22 Australian dollars per share — doubling on the issue price of 1 Australian dollar per share.
  • Rio Tinto, the world’s largest iron ore miner, posted a 5% drop in third-quarter shipments, and warned that the rate of recovery could slow further in most economies.
  • But markets were mostly down in other regional markets. Japan’s Nikkei 225 was flat, while in South Korea the Kospi traded lower by 0.31%.

UNITED STATES

  • US stocks finished well off session lows but ended with losses for a third day on Thursday, as rising coronavirus cases, especially in Europe, resulted in new restrictions on businesses and travel.
  • Investor sentiment also took a hit following a rise in weekly US jobless claims and a lack of progress in Congress on another fiscal stimulus bill which is now unlikely until after the November elections.
  • The Nasdaq index was also depressed by a Goldman Sachs note cutting its recommendation on technology stocks to neutral, saying likely policy shifts and slowing economic growth may temporarily cap the outperformance of the sector.
  • In economic reports, US weekly jobless claims data, a closely watched high-frequency date point in the pandemic era, climbed 53,000 to 898,000.

CURRENCIES

  • The rand weakened on Thursday, as market participants digested an economic recovery plan focusing on infrastructure investment and job creation unveiled by President Cyril Ramaphosa.
  • At the close, the rand was trading at R16.64 versus the US dollar, 0.66% weaker than its previous close.
  • Ramaphosa said South Africa will embark on a massive public works and job-creation drive in response to the coronavirus crisis to return Africa’s most industrialised economy to growth.
  • Demand for the rand in recent months has been partly supported by the still high yield on offer on local assets despite the central bank cutting lending rates to a record low.

COMMODITIES

  • Oil prices fell this morning on concerns that major producers will move ahead with plans to ease their supply cuts even as a spike in Covid-19 cases in Europe and the United States is curtailing demand in two of the world’s biggest fuel consuming regions.
  • OPEC+ is set to reduce its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd in January even as OPEC Secretary General Mohammed Barkindo admits fuel demand is looking “anemic.”
  • Gold prices inched lower today, on track for its first weekly decline in three, as the dollar held firm and US stimulus talks showed no progress.

Domestic Company News

PEPKOR (PPH) +0.3%

  • The South African retail group, which owns value clothing chains like Pep, Ackermans and Shoe City, warned shareholders on Thursday that it expected earnings to drop at least 20%.
  • The retailer estimates that HEPS could drop by 19.4 cents from the 96.8 cents in the prior period.
  • “The COVID-19 pandemic has impacted the performance in many areas of the group, most notably through lost sales and increased provision levels on credit books.
  • This has contributed to the likely impairment of carrying values of goodwill and intangible assets,” the group said.

PSG GROUP (PSG) +3.2%

  • The investment holding group announced it will proceed with a R377 million interim dividend, unchanged from the comparative period, saying the group remains confident its investees will rebound as the economy re-opens.
  • The group calculated its total sum-of-the-parts value at R16.38Bn as of the end of August, which includes its R5.76Bn stake in PSG Konsult, R2.7Bn in Capitec and a R1.87Bn stake in education group, Curro.
  • “Despite obvious challenges, PSG believes its investment portfolio is suitably positioned to capitalise on an improvement in trading conditions,” the group said.

Global Company News

MORGAN STANLEY (MS) +1.3%

  • The last of the six biggest banks in the US to report Q3 numbers, Morgan Stanley managed to record a 26% jump in profits to $2.7Bn or $1.66 per share, well exceeding the $1.28 estimate of analysts on Wall Street.
  • The bank generated 16% more revenue during the period to $11.7Bn, more than $1Bn ahead of expectations.
  • Like its peers, the group benefitted from higher equity and fixed income trading due to market volatility caused by the global pandemic.
  • CEO James Gorman: “We delivered strong quarterly earnings as markets remained active through the summer months, and our balanced business model continued to deliver consistent, high returns”.

WALGREENS BOOTS ALLIANCE (WBA) +4.8%

  • On Thursday, the drugstore chain announced it expects profit growth in 2021 after reporting better-than-expected Q4 results, boosted by higher sales in its US pharmacies.
  • The group’s net income dropped to $373 million or 43 cents a share, from $677 million or 75 cents a share in the previous period.
  • Overall revenue rose 2.3% to $34.75Bn, ahead of the $34.37Bn analysts predicted, with US sales increasing 3.6% to $27.00Bn.
  • "While the company anticipates a gradual reduction in COVID-19 impacts, the first half results will continue to be negatively impacted when compared with the pre-COVID-19 first half of fiscal 2020," the company said in a statement.

Download full report here.

Share now
About the Author
avatar

Research Team

Media, Sasfin Wealth

Related Articles
articles image

Taking Stock

By Research Team

articles image

Taking Stock

By Research Team

©2019 Sasfin. All right reserved. Financial Services Provider (FSP) 23833 and Registered Credit Provider NCRCP22

;