Dow jumps to record high | Moderna coronavirus vaccine more than 94% effective | Value stocks continue outperforming

17/11/2020 Investors continued to rotate into stocks more sensitive to economic growth as they weighed renewed optimism about a Covid-19 vaccine against the coronavirus’s continued spread. The dollar extended a decline. While most Asian benchmarks are little changed this morning, energy and financial stocks are pushing higher, with health care and communication shares lagging. U.S. and European futures are lower after the S&P 500 closed at an all-time high as Moderna Inc.’s vaccine was shown to be 94.5% effective. Oil advanced above $41 a barrel. Tencent trades 2.01% lower in HK. The JSE Top 40 futures are indicating a flat to slightly negative start, with the Rand slightly weaker this morning.

Locally the FTSE/JSE Africa All-Share Index closed up 0.2% to 57,267, mostly supported by resources on the back of higher commodity prices, with the platinum sector soaring 6.9%, with retailers weighing the most. The Rand 1.3% stronger at 15.3273 per US$ at 8:06pm, with the Yield on 10 year govt rand bonds that fell 8.1 bps to 8.812%.
President Cyril Ramaphosa hosts the country’s third annual investment conference that’s part of government plans to attract more than 1 trillion rand over the next five years to help the economy recover from what’s forecast to be the biggest contraction in nine decades this year.
European Firms Say S. Africa’s Poor Utilities Deter Investment

  • S. Africa’s Economic Blueprint Lacks Funding Details, Mbeki Says
  • Environment ministry presents report on conservation of sharks
  • 10am: Inquiry into state capture continues to hear an application by former President Jacob Zuma for Chairman Raymond Zondo to recuse himself
  • 2pm: President Cyril Ramaphosa hosts annual investment conference

CORPORATE EVENTS:

  • Annual general meeting: Fairvest Property (FVT SJ)

EU/UK
European stocks closed higher on Monday as hopes for an effective coronavirus vaccine were further boosted by positive news from Moderna. The pan-European Stoxx 600 closed up by 1.1%, with oil and gas stocks jumping 4.2% to lead gains as almost all sectors and major bourses remained in positive territory. Germany’s DAX ended up 0.47%, while France’s CAC gained 1.7%, with London’s FTSE 100 closing up 1.6%. In corporate news, Spanish financial group BBVA has agreed to sell its U.S. business, BBVA USA Bancshares, to PNC Financial Services Group for $11.6 billion. BBVA shares jumped more than 15% by afternoon trading, while compatriot Banco de Sabadell also gained more than 24%.
US
U.S. stocks rose on Monday after preliminary coronavirus vaccine data from Moderna further lifted expectations of a strong economic recovery. The Dow Jones Industrial Average gained 470.63 points, or 1.6%, to close at 29,950.44. The 30-stock Dow logged intraday and closing record highs. The S&P 500 climbed 1.2% to 3,626.91, posting an all-time closing high. The Nasdaq Composite advanced 0.8% to 11,924.13. Stocks that would benefit from the economy reopening led the way higher. United Airlines was up 5.2%, and Carnival closed 9.7% higher. Bank stocks such as Citigroup and Wells Fargo gained more than 3% each and JPMorgan Chase advanced 2.8%. Moderna shares jumped 9.5% on the day. Shares of companies that have thrived during the pandemic as people spend more time at home lagged the boarder market. Netflix slid 0.8%. Amazon shares closed flat.
ASIA
Asia markets bounced in Monday’s session after 15 economies in the region signed a deal that formed the world’s largest trade alliance. Tech and auto stocks soared. The trade deal, signed on Sunday, aims to gradually reduce tariffs across many areas, according to Reuters. It marks the first time that East Asian powers China, Japan and South Korea are in a single trade agreement. In Japan, the Nikkei 225 gained 2.05% to close at 25,906. Japan’s economy rebounded sharply, growing an annualized 21.4% in the third quarter, data showed on Monday. On a quarterly basis, the economy grew 5%, better than forecasts of 4.4%, and a sign that the country was recovering from the damage caused by the pandemic. In South Korea, the Kospi rose nearly 2% to close at 2,543. Mainland Chinese stocks were higher by the close. The Shanghai composite rose more than 1% to 3,346, while the Shenzhen component was up 0.7% to 13,850. The country’s factory output rose faster than expected in October jumping 6.9%, data showed on Monday. Retail sales continued to recover, climbing 4.3% year-on-year, but missing forecasts of a 4.9% growth. Hong Kong’s Hang Seng index rose 0.58% in the afternoon. Casino and finance stocks listed in the city were going strong. Standard Chartered was up 4.80%, while HSBC bounced 3.49%.
COMMODITIES
Oil edged higher toward $42 a barrel with investors weighing news of another Covid-19 vaccine breakthrough as OPEC+ moved closer to delaying a planned easing of output cuts. Futures in New York added 0.7%. Optimism grew after an OPEC+ panel said the group, which meets again on Tuesday, should consider holding off on production increases by three to six months.
Gold steadied following a bumpy session on Monday as investors weighed the latest news on vaccine developments with the increasing pace of coronavirus infections in the U.S. and a weakening of the dollar. Spot gold traded 0.1% higher at $1,890 an ounce at 11:39 a.m. in Singapore. Prices fell as much as 1.3% on Monday after the Moderna news, before recovering. Silver and palladium were steady, while platinum dropped 0.4%.
Iron ore futures gained amid strong industrial and property data from China, while the steel rebar contract in Shanghai was on track for the highest close since July last year, futures rose 0.4% to $120.71 a ton, after gaining 0.9%
on Monday.
Copper held near its highest close in more than two years as optimism about a vaccine breakthrough against Covid-19 boosted sentiment. Copper in London rose as much as 0.4% before trading steady at $7,106 a ton by. Prices jumped 1.8% on Monday to close at the highest since June 2018.