Taking Stock - Google has been fined €220m.

In todays taking stock, we discuss how technology giant Google has been fined €220m.

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MARKET COMMENTARY

 

SOUTH AFRICAN MARKET COMMENTARY

The Johannesburg All-Share index (at 67,575 index points) and Top-40 index fell, tracking moves in global markets as investors digested the impact of a global minimum corporate tax on technology companies backed by the Group of Seven advanced economies. Both indices slipped 0.37%. Johannesburg-listed shares of diversified mining giant Anglo American fell 2.06% following the spin-off of its coal mining business Thungela Resources. The decline in stocks was also driven by weak momentum in technology stocks, primarily index heavyweight Naspers, which closed 1.22% weaker.

 

 

EUROPEAN MARKET COMMENTARY

European stocks closed slightly higher Monday, despite fears over rising inflation. The pan-European Stoxx 600 index ended the session up about 0.2%. Autos shares were the best performers, climbing 0.9%, while basic resources were the laggards, slipping 1.6%. Investors around the world are looking ahead to the release of key U.S. inflation data on Thursday. In April, the Consumer Price Index (CPI) rose 4.2% from the previous year, the fastest increase since 2008.

 

 

US MARKET COMMENTARY

The S&P 500 fell slightly on Monday as the benchmark struggled to make a run at a record high after a winning week. Meme stocks were back in the spotlight again this week. AMC rallied as much as 25% on Monday and closed nearly 15% higher, while GameStop and BlackBerry also popped double digits. Most of these speculative stocks slid into the red last Friday — despite massive gains — after volatile trading. Investors are focused on inflation data in the week ahead, with May’s Consumer Price Index (CPI) scheduled to be released Thursday.

 

 

ASIAN MARKET COMMENTARY.

Shares in Asia-Pacific were mixed this morning, as investors reacted to the release of Japan’s revised first-quarter gross domestic product figures. Revised government data released today, showed Japan’s economy shrank 3.9% in the first quarter, an improvement from the initial estimate of a 5.1% contraction. The revised gross domestic product compared against economists’ median forecast in a Reuters poll for a 4.8% contraction.

 

 

 

CURRENCY MARKET COMMENTARY

The rand weakened on Monday, pausing after rallying to a 28-month high, as investors took profits and looked ahead to local growth figures and US consumer price data. At the close, the rand was 0.46% softer as it traded around R13.48 to the dollar. Investors are eyeing gross domestic product (GDP) numbers for the first quarter due to be released today. Economists polled by Reuters expect annualised growth to have skidded to 2.6% from 6.3% in the previous quarter. Local mining, manufacturing and current account data are also due in the week before the United States publishes inflation data on Thursday, with a European Central Bank meeting concluding on the same day.

 

 

COMMODITIES MARKET COMMENTARY

Gold prices edged lower this morning, weighed down by an uptick in the dollar, while investors cautiously awaited US economic data due later this week to gauge inflationary pressure and the Federal Reserve's steer on monetary policy. Oil prices lost more ground earlier today as concerns about the fragile state of the global recovery in demand for crude and fuels were heightened by data showing China’s oil imports fell in May.

LOCAL COMPANIES

FirstRand (FSR) +0.1%

FirstRand sees profit rising more than expected after the South African economy rebounded strongly from the early stages of the coronavirus pandemic. Africa’s biggest bank by market value sees earnings per share rising by at least 35% in the year through June, according to a statement on Monday. Impairments are significantly lower than anticipated and the cost of credit has improved, the Johannesburg-based company said. “Current trends indicate that customers are utilising discretionary savings as the economy has opened up,” FirstRand said. “Consumer spending is now back at pre-Covid levels.” The lender joins other South African banks in seeing an improved outlook as the nation recovers from an economic contraction of 7% last year, largely caused by lockdown measures to contain the coronavirus. Standard Bank Group Ltd. said last week it anticipates headline earnings per share will rise by at least 40% for the six months through June. South Africa’s central bank sees a a rebound to 4.2% growth this year, and first-quarter data due Tuesday will probably show an expansion from the previous three months. That said, the economy is still likely to have contracted from the mostly pre-lockdown period a year earlier, while power-supply shortages continue to weigh on the recovery. South Africa’s banking regulator has also relaxed guidance on capital preservation, altered to make sure the industry continued to lend during the worst of the pandemic. That’s helped South Africa’s big four banks issue dividend payments earlier this year.

 

 

Adapt IT (ADI) -2.8%

Volaris Group, the Canadian firm pursuing JSE-listed software services group Adapt IT, has sweetened its all-cash offer to R7/share in an effort to see off a rival bid from South Africa’s Huge Group. Volaris had previously offered shareholders R6.50/share, also all in cash. Nodus Capital, appointed by an Adapt IT independent board to consider the fairness and reasonableness of the offer, has previously said a valuation of between R7 and R9.09 would be fair for shareholders. It has now said the new offer price is fair and the independent board has concurred with that finding.

INTERNATIONAL COMPANIES

Google (GOOG) +0.6%

Technology giant Google has been fined €220m (£189m) by French authorities for abusing its advertising power. France's competition watchdog said Google has been promoting its own online advertising services to the detriment of rivals. It found that Google's ad management platform for large publishers, Google Ad Manager, favoured the company's own online ad marketplace, Google AdX. Google said it would make changes to its advertising business. The US tech giant has agreed to make it easier for publishers to use its data and tools. "We will be testing and developing these changes over the coming months before rolling them out more broadly, including some globally," the company said. It is not the first time the company, owned by Alphabet, has been slapped with heavy fines for falling foul of European advertising rules. Google was fined €1.49bn (£1.28bn) by the EU for blocking rival online search advertisers in 2019. It was also fined €50m (£44m) in 2019 by the French data regulator CNIL, for a breach of the EU's data protection rules. The EU competition authority fined the company a record €4.34bn (£3.9bn) fine in 2018 for using its popular Android mobile operating system to block rivals. That followed a €2.42bn fine in 2017 for hindering rivals of shopping comparison websites.

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