Quick summary

  1. Gold price is up due to the weaker dollar.
  2. Oil price is up as U.S. stimulus expectations boost hopes for fuel demand.
  3. The dollar weakens due to Janet Yellen’s big-spending comments.
  4. U.S stocks closed higher as Yellen announced more U.S stimulus measures.
  5. Japanese stocks are lower at the close of trade; Nikkei 225 is down 0.38%
  6. Alibaba’s Jack Ma makes his first public appearance in three months.
  7. Walt Disney cuts bonuses for top executives to soften the impact of the COVID-19 fallout.
  8. U.S. agency orders Ford to recall 3 million vehicles due to concerns over airbags.
  9. Tyson Foods reaches more settlements in chicken price-fixing litigation.
  10. Currencies: USD/ZAR – R14.89, EUR/ZAR – R18.09, and GBP/ZAR – R20.35

 

The highlights

Commodities

  1. Gold was up on Wednesday morning in Asia, thanks to a weaker dollar and comments from Secretary of the Treasury nominee Janet Yellen calling for more COVID-19 relief spending helping to lift the yellow metal’s appeal as an inflation hedge. Yellen made the comments during her Senate confirmation hearing before the Senate Finance Committee on Tuesday, arguing that the economic benefits of a large stimulus will far outweigh the risks of a higher debt burden. The dollar fell for a second consecutive session on Tuesday, while most U.S. Treasury yields fell after Yellen said in her hearing that tax cuts enacted in 2017 for large corporations should be repealed. The greenback continued the losses on Wednesday. Meanwhile, President-elect Joe Biden and his administration take office later in the day, with investors focused on the previous week’s $1.9 trillion stimulus package proposal to boost the economy and speed up COVID-19 vaccine distribution.
  2. Oil was up Wednesday morning in Asia, holding onto gains seen during the previous session. Expectations that the incoming Joe Biden administration will push through more, massive U.S. stimulus measures boosted hopes for fuel demand and a drawdown on crude oil stocks. Even a 580,000 barrels-per-day cut in the International Energy Agency (IEA)’s outlook for first-quarter oil demand failed to dampen sentiment for the black liquid. The IEA’s cut came as the incessant rise in COVID-19 numbers sees tight lockdowns and border closures in Europe.

 

Forex

  1. The dollar was down on Wednesday morning, with investors digesting U.S. Secretary of the Treasury nominee Janet Yellen’s big-spending comments. The euro held onto its gains as a better-than-expected sentiment survey in Germany brightened the mood. Meanwhile, Yellen urged Congress to “act big” on COVID- 19 relief and not worry too much about debt during her Senate confirmation hearing before the Senate Finance Committee on Tuesday. Her comments helped mitigate the risk-averse tone seen earlier in the week and turned investors away from the safe-haven U.S. currency.

 

Stock Market

  1. Wall Street’s main indexes rose on Tuesday as U.S. Treasury Secretary nominee Janet Yellen advocated for a hefty fiscal relief package before lawmakers to help the world’s largest economy ride out a pandemic-driven slump. At her confirmation hearing, Yellen said the benefits of a big package outweigh the costs of a higher debt burden. The Dow Jones Industrial Average rose 0.38%, the S&P 500 gained 0.81%, and the Nasdaq Composite added 1.53%.
  2. Japanese stocks were lower after the close on Wednesday, as losses in the Paper & Pulp, Railway & Bus and Real Estate sectors led shares lower. At the close in Tokyo, the Nikkei 225 lost 0.38%. The worst performers of the session were Daiichi Sankyo Co., Ltd., which fell 3.97% at the close. Keio Corp. declined 3.90% and ANA Holdings Inc was down 3.35%.
  3. Alibaba Group founder Jack Ma made his first appearance since October on Wednesday when he spoke to a group of teachers by video, easing concern about his unusual absence from public life and sending shares in the e-commerce giant surging. Speculation over Ma’s whereabouts has swirled in the wake of news this month that he was replaced in the final episode of a reality TV show he had been a judge on and amid a regulatory clampdown by Beijing on his sprawling business empire. China has stepped up a regulatory crackdown on anticompetitive behavior in the internet sector and Alibaba became the target of an antitrust investigation launched last month by Chinese authorities. The company plans to raise at least $5 billion through the sale of a U.S. dollar-denominated bond this month.
  4. Walt Disney Co said on Tuesday it had eliminated performance-based bonuses last year for top executives, including Executive Chairman Bob Iger, as the media company looks to soften the impact of the COVID-19 fallout. The pandemic dealt a major blow to the company’s theme parks and movie studio business, while people sheltered at home during the lockdown pumped up sign-ups on its Disney+ streaming service. Iger received total compensation of $21 million for the fiscal year 2020, significantly lower than the $47.5 million he had received in the prior year, Disney disclosed in a regulatory filing.
  5. Ford Motor Co must recall 3 million vehicles with potentially defective driver-side Takata airbags, the U.S. auto safety regulator said on Tuesday, rejecting a bid by the second-largest U.S. automaker to avoid a recall. The National Highway Traffic Safety Administration (NHTSA) said it was denying petitions filed by Ford and Mazda Motor Corp in 2017 seeking to avoid recalling vehicles with potentially dangerous inflators. The decision also will require Mazda to recall and repair driver airbags in approximately 5,800 vehicles. The recalls will cover various vehicles from 2006 through 2012 model years. Earlier this month, the auto safety agency said at least 17 million vehicles with Takata airbags remain unrepaired. Takata inflators have resulted in the deaths of at least 27 people worldwide and 18 in the United States, and over 400 reported injuries.
  6. Tyson Foods Inc agreed to settle price-fixing litigation with two more groups of plaintiffs accusing it of illegally conspiring to inflate prices in the $65 billion chicken industry. The settlements with so-called “end-user” consumers and with more than 30 commercial purchasers were disclosed in filings on Tuesday in federal court in Chicago. Eight days ago, Tyson agreed to settle related antitrust claims by purchasers who bought chickens directly from the Springdale, Arkansas-based company. Restaurants, supermarkets, food distributors, and consumers accused chicken producers of having conspired since 2008 to inflate chicken prices, through tactics such as restricting production and sharing non-public data about supply and demand.

Chart of the week

The performance of the FTSE JSE Capped Swix VS the S&P 500, rebased to 100 (In U.S dollar terms)

Weekly COVID-19 Update:

The global death toll is now over 2 million people, with 95 million confirmed cases. Few countries have been spared the ravages.

More than 25 million vaccine doses are administered globally. Israel with the highest number per capita while the rest of Europe has been accused of dragging its feet.

South Africa is now past 22,000 new infections in a single day, with total infections of over 1.2 million and 35,000 deaths.

  • SA government will spend R20.6-billion to inoculate two-thirds of the population by the end of 2021 and the state will be the sole buyer. Most of the doses will come from AstraZeneca. The vaccine roll-out should begin next month.

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.

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