winding Down


As 2020 winds down and we enter the final six weeks of the year, markets are continuing to trade sideways, with the exception of a few sporadic yet limited movements on the back of vaccination hopes.


Hot on the heels of Pfizer, US-based biotech firm Moderna also announced this week that it has developed a COVID-19 vaccine that has demonstrated an over 90% success rate in late stage trials, seeing the risk rally pick up steam again as markets digest the implication of what a successful vaccine might mean for the future.

Meanwhile, US President Trump has opted to avoid any public appearances for the time being, as his schedule has stated, “No public events,” for eleven days now. Most expected that a loss to Biden would deeply upset the reigning president, but Trump’s switch to a passive, rather reclusive approach has come as quite a surprise. And in another blow to Trump’s authority, the Senate additionally blocked his rather controversial nomination of Judy Shelton to the Federal Reserve board this week, as Shelton represents fairly unconventional economic views.

In Europe, leaders continue to strive for a coherent and inclusive union across all nations in the block despite the many challenges facing the bloc, ranging from political regimes to economic fallout. Maroš Šefčovič, the Vice-President of the European Commission for Interinstitutional Relations, thus delivered a speech this week that placed emphasis on the resilience of the EU, and maintaining open strategic autonomy by reducing dependencies and maintaining an open economy at the same time.

The clock on Brexit talks between the EU and UK has also reached the final countdown. However, it seems that the gap between the two nations are no closer to being narrowed than at the beginning of the negotiations. Notably, future access to British water for fisheries remains a key topic of contention, and pressure is now on leaders to publish a plan of action should a no-deal Brexit be realized.

Examining the data released this week:


• Retail sales disappointed, gaining 0.3% month-on-month in October versus the expected 0.5%
• Industrial production met expectations, adding 1.1% month-on-month
• Jobless claims accelerated to 742k


• CPI contracted by 0.3% year-on-year in October


• Unemployment remained steady at 5.3%
• Retail sales contracted year-on-year by 6.83%
• Industrial production year-on-year outperformed expectations of 6.5%, gaining 6.9%


• PPI contracted by 1.3% year-on-year in October
• CPI gained 0.7% year-on-year, marginally higher than the expected 0.6%


It was another interesting week for global equity markets, as Moderna shared the promising results of its third phase COVID-19 vaccine trials, which showed that the vaccine was 94.5% effective. By Wednesday morning, the NASDAQ, Dow Jones and S&P 500 had then all rallied more than 1% each to all-time high levels.

Notably, the well-timed drug trial announcements don’t mark the end of the pandemic. But with daily coronavirus cases across parts of Europe and North America quietly soaring to the highest levels seen since their respective peaks during the first wave, these announcements have provided a glimmer of hope that we could be on the path to global economic recovery sooner than expected.

Additionally, Pfizer’s initial announcement tagged their vaccine’s success rate at around 90%, it has since moved to 95% this week, similar to Moderna’s results. The details of each vaccine, as per each company’s announcements, are each summarised below:

Vaccine Name: BNT162B2
Dose: 30 Micrograms
Efficacy: 95%
Cost: $19.50 per dose (intravenous)

Vaccine Name: MRNA-1273
Dose: 100 Micrograms
Efficacy: 94.50%
Cost: $37.00 per dose (intravenous)

However, despite Pfizer and Moderna both sharing good news on promising vaccines, their share prices have acted quite differently. Moderna’s share price is currently up over 425% in the year-to-date, trading at $93.15, while Pfizer’s share price is trading around 7.60% lower for the year at levels of around $36.04 per share.

Staying within the pharmaceutical industry, Amazon announced on Monday that it would be making a massive move into the digital (online) pharmaceutical space, which instantly sent in-store rivals such as CVS Health, Walgreens and Rite Aid tumbling between 8% and 16% on the day. Many analysts are currently speculating that this quiet little move from Amazon could play a major role in disrupting and evolving the pharmaceutical industry in the US as we know it.

Turning to tech and automotive, the S&P Dow Jones Indices announced on Monday that Elon Musk’s Tesla would be added to the S&P 500 index after just missing out on the inclusion around two months ago. The news saw Tesla’s stock price jump more than 12% on the day to levels as high as $460.00 per share, only to settle around the $440.00 level for the remainder of the week. After many years of hard work in climbing from startup to becoming one of the world’s largest electric car companies, Tesla will finally enter the dining halls of the giants on the S&P 500, which will ultimately bring it favour in the eyes of government and even more institutional investors.

Turning to earnings, some of the larger retailers who thrived during the lockdown months such Home Depot, Walmart and Target announced their Q3 numbers, as summarised below:

Walmart: Earnings per share (EPS) came in at $1.34 versus expectations of $1.18, while revenue was reported at $134.7bn versus the $132.2bn expected.
Home Depot: Earnings per share (EPS) came in at $3.18 versus expectations of $3.06, and revenue reached $33.54bn versus the $32.04bn expected.
Lowe’s: Earnings per share (EPS) came in at $1.98 versus expectations of $1.99, while revenue was reported at $22.31bn versus the $21.25bn expected.
Target Corp: Earnings per share (EPS) came in at $2.79 versus expectations of $1.60, and revenue reached $22.66n versus the $20.93bn expected.
NVIDIA: Earnings per share (EPS) came in at $2.91 versus expectations of $2.57, and revenue reached $4.73bn versus the $4.41bn expected.

After many months of addressing flaws in its 737 Max aircraft, Boeing finally received approval from the US aviation regulators this week. Although this seems to be great news for the company, feelings on the ground were very different. When asking frequent fliers what they felt about the approval of the 737 Max planes, the resounding response was a roaring, “No!” For now, we will have to monitor the reinstatement of this aircraft, which is likely to be successful given the lack of awareness among the greater public.

Year-to-date, the Dow Jones is now up 3.31%, the NASDAQ up 32.68%, and the S&P 500 up 10.87% for the year. In South African rand-terms, add 10.05% against each of these return-figures to account for the currency-effect.


Following Moderna’s impressive vaccine news, Brent Crude traded almost 4% higher on Monday at levels of around $44.40 per barrel (WTI at $42.40). This was the result of underlying hope that the global economy will come back to life sooner than expected.

Both Brent and US WTI initially held well at these higher levels before sliding around 1.0% and 2.2% respectively on Wednesday on the back of a weekly US oil inventory build.

As per the US Energy Information Administration, a build of 800,000 barrels was seen during the week ending 13 November, where expectations had been pinned at a build of 1.95 million barrels. This follows the previous week’s oil inventory build of 4.3 million barrels. Nevertheless, a build in inventory always leads to softer oil prices due to the psychological assumption that supply could now be outweighing demand.

Going forward, investors should consider the state of the current global economy as it seemingly heads into a second round of pandemic lockdowns.

Brent traded at $44.25 per barrel on Friday morning, while WTI traded at $41.72

There’s been some concern regarding the price of gold over the last week, as it quietly dipped under its four-month support level of around $1,870.00 per fine ounce on Thursday morning. With the almost certain need for further stimulus in the US, liquidity could continue to favour equities should the current state of the market remain intact. A close eye needs to be kept on gold, as many technical signals are now pointing towards a move lower in the short to medium-term.

Platinum and palladium performed relatively well this week on the hopes that the automotive industry will return to full production levels sooner-than-later, given both Pfizer and Moderna’s recent vaccine updates. Platinum was favoured as the less expensive platinum group metal (PGM) this week, while palladium lagged in relative terms. 

On Friday morning gold traded at $1,865.15, platinum at $952.39, and palladium at $2,326.38 an ounce.


Although rumours of another potential interest rate cut in South Africa did the rounds as turmoil continues to plague the local economy, the SARB opted to keep interest rates unchanged on Thursday.

As South Africa continues to combat the economic impact of the pandemic and the subsequent lockdown, the political landscape has been rather quiet – except, of course, for EFF activity, particularly regarding race relations.

ANC heavyweight Ace Magashule also topped the headlines this week after being granted bail for his involvement in the asbestos scandal. The political heavyweight continues to insist on his innocence, while South Africans wait with bated breath for the judicial system to run its course.

Local retail sales contracted by 2.7% year-on-year in September, improving from the previous contraction of 4.1% in August.


With a softer week spent trading around the 57,300.00 level, the JSE All Share Index (ALSI) showed signs of some weakness. This came as COVID-19 vaccine news has slowly been overshadowed by the plethora of second-wave lockdowns seen across the northern hemisphere, weighing on sentiment.

Local retailer Spar surprised most investors on Wednesday, reporting that revenue (R124.3 billion) came in 13.5% stronger for the year ending 30 September 2020 than the previous 12-month financial period. In southern Africa alone, Spar saw a 5.8% increase in revenue at R78.6 billion. The results were a welcome surprise to investors, who expected the lockdown period to have had a more detrimental impact on results. The news assisted the share price over 10% higher on the morning to levels of around R205.39 per share. Total dividends for the year came in at R8.65 per share, 8.1% higher than the previous financial year’s dividends.

A key reason for Spar’s stronger performance was customers opting to shop at smaller, local convenience stores in their neighbourhoods, rather than at the larger crowded malls where Spar’s main competitors tend to be housed. Spar was well positioned to capitalise on this trend, filling the role of a more community-based, smaller outlet. The strategic size and location of Spar’s stores in more suburban areas managed to bear fruit in a way that investors possibly hadn’t expected.

Turning to the hospitality industry, City Lodge released a cautionary announcement to investors on Thursday regarding an offer from a buyer to purchase City Lodge’s East African operations based in Tanzania and Kenya. They buyout offer would include all hotels owned and managed by City Lodge in those respective regions. City Lodge traded 2.65% higher on the news at levels of around R3.49 per share on Thursday.

Telecommunications giant Telkom then whipped out its boxing gloves this week to take a jab at the relationship being built between Vodacom and Michael Jordaan’s new high-spectrum provider, Rain. Sipho Maseko of Telkom raised the anti-competitive behaviour flag between Rain, MTN and Vodacom this week in an effort to try and capture more spectrum allocation under Telkom’s umbrella, stating that MTN and Vodacom seem to be heading towards a ‘dual-monopoly’ in terms of South African spectrum providers. Markets will be watching this space for more clarity.

For now, the news flow remains relatively quiet on the South African front, with less value being traded through the ALSI during the week as the world seemingly stares at another potential economic slowdown owing to widespread lockdowns.

Looking at SA indices this week, financials and banks were in the spotlight:

• All Share (J203): -0.30%
• Top 40 (J200): -0.54%
• Resources 10 (J210): 0.58%
• Industrial 25 (J211): -1.28%
• Financial 15 (J212): -0.39%

Year-to-date, the JSE ALSI is down 0.58% and the Top 40 is up 2.29%. Sector-wise, industrials are now up 13.26% for the year, resources up 4.45%, and financials down 26.48% for the year so far.


The dollar has ended its week-long slide as the US Treasury Secretary announced that certain stimulus would cease by year-end. Markets remain unchanged for the most part, and will continue to focus on vaccine developments.

From a data perspective, we will keep an eye on local CPI numbers, US GDP, and the ECB Financial Stability Review. The rand started the day trading at R15.42/$, R18.31/€ and R20.45/£.