Quick Summary

  1. Oil prices slip as U.S. inventory build stokes fears of supply glut.
  2. Gold up over weakening dollar and rising stimulus hopes.
  3. US equity markets rally on stimulus hopes.
  4. Netflix reports slowing subscriber growth.
  5. The US DOJ files antitrust lawsuit against Google.
  6. Snap (SNAP) shares are up 18% in after-hours trading.
  7. Pioneer Natural Resources is in talks to buy rival Parsley Energy.
  8. Large-cap stocks that are primed for short squeezes.
  9. Volatility has historically brought gains with it.
  10. USD/ZAR 16.40, EUR/ZAR 19.45, GBP/ZAR 21.31.

Market Highlights

Commodities

  1. Oil prices eased on Wednesday after a surprise build-up in U.S. crude stockpiles stoked concerns about a global supply glut even as a spike in global COVID-19 cases fuelled fears of slower recovery in fuel demand. Brent crude futures (LCOc1) for December delivery were at $42.93 a barrel, down 23 cents, or 0.5%, as of 0332 GMT, while December U.S. West Texas Intermediate (WTI) crude (CLc1) futures slipped 20 cents, or 0.5%, to $41.50 a barrel. Both benchmarks rose in the previous session.
  2. Gold was up on Wednesday morning in Asia, boosted by a weak dollar and the prospect of the U.S. Congress passing the latest stimulus measures ahead of the Nov. 3 presidential election. Gold futures were up 0.38% at $1922.75 by 12:26 PM ET (4:26 AM GMT). The dollar was down on Wednesday morning.

Stock Market

  1. US. equity markets rallied out of the gate this morning as renewed hopes of a new stimulus deal emboldened investors to return to buying stocks. That rally lost some steam into the close as House Democrats downplayed the timeline they had set for the White House to agree to a deal by this evening. In keeping with its recent trend, the S&P 500 has been stuck below 3,550 for weeks. Still, a strong rally across most sectors helped ease some of the Monday’s losses.
  2. Netflix (NFLX) reported earnings for its third quarter that fell short of analyst estimates on earnings per share and global paid net subscriber additions, but it exceeded expectations on revenue. Netflix said it gained 2.2 million subscribers last quarter, but the slowed growth was largely expected. In the same quarter last year, Netflix added 6.8 million subscribers. Shares of Netflix fell as much as 6% during after-hours trading.
  3. The U.S. Department of Justice (DOJ) dropped an antitrust lawsuit on Google, claiming it has a monopoly on search advertising and forces its Google app onto mobile phones (much more below). It’s the first of many antitrust complaints the DOJ and the Federal Trade Commission are working on against Google, Amazon, Facebook, and Apple. While antitrust allegations and accusations of monopolistic behaviours are serious matters, investors are clearly not too concerned.
  4. Snap (SNAP) shares are up 18% in after-hours trading after the company reported an increase in daily active users, which now total 243 million, up 4% from the 238 million the company reported in July. That figure is up nearly 19% compared to the 210 million daily users the company reported a year prior. Snap also reported net losses of $200 million, which was smaller than expected but still down 12% from a year ago.
  5. Oil and gas producer Pioneer Natural Resources is in talks to buy rival Parsley Energy in an all-stock deal, according to The Wall Street Journal. This agreement would continue the trend of consolidation in the struggling sector.
  6. Cloudflare, Zoom Video Communications, Peloton, and Slack are among the large-cap stocks primed for short squeezes, according to a new note from S3 Partners. This is when short sellers are forced to cover their positions to restrict losses, which results in the prices being pushed higher. Short squeeze candidates are identified by looking at mark-to-market percent losses and/or high stock borrow costs. All included have over $100 million of total short interest. 
  7. 2020 has been a year for the head-spins, to say the least. As Ben Carlson notes on his blog, at certain points this year the S&P 500 has been up 8% and down 30% from where it finished in 2019. It’s currently up around 8% on the year. The Nasdaq 100 has been up as much as 43%, down as much as 20%, and currently sits at a 35% gain in 2020. The Russell 2000 Small Cap Index has been up as much as 2% in 2020, down as much as 40%, and currently sits at basically breakeven for the year. JPMorgan Asset Management created a chart that compares the biggest peak-to-trough drawdowns each year on the S&P 500 to the total return for that year

Chart of the week

Hope to Growth

Weekly COVID-19 Update:

The coronavirus has killed at least 1,069,029 people since the outbreak emerged in China last December.

  • At least 36,934,770 cases of coronavirus have been registered. Of these, at least 25,530,500 are now considered recovered and 5,965 new deaths and 355,634 new cases were recorded worldwide.

The United States is the worst-hit country with 213,795 deaths from 7,665,150 cases. At least 3,039,089 people have been declared recovered.

After the US, the hardest-hit countries are Brazil with 149,639 deaths from 5,055,888 cases, India with 107,416 deaths from 6,979,423 cases, Mexico with 83,507 deaths from 809,751 cases, and the United Kingdom with 42,679 deaths from 575,679 cases.

In South Africa, the number of recoveries in the country stands at 625 574, which accounts for nine out of every 10 people infected with the virus are recovering from it.

  • South Africa has 11th most Covid-19 infections in the world.
  • The Gauteng province has the most deaths, with 4461, followed by the Western Cape, with 4260, Eastern Cape with 3300 and KZN, with 3006, have the most fatalities in the country.

link to the COVID-19 Map to keep track of the Coronavirus.

https://coronavirus.jhu.edu/map.html

 

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Past performance is not necessarily a guide to the future and investors may not get back the full amount invested. Asset class information is as at the stated date. However asset allocations could change considerably over time subject to mandate parameters.