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The Week Ahead

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The Week Ahead

Published Date: 2021-03-01 | Source: INCE|Connect | Author: Chris Gilmour

The Week Ahead

The US Labor Department figures for initial jobless claims in the US showed a big reduction last week, from a revised 841 000 to 730 000. Continuing claims were 4.419 million vs 4,46 million. President Joe Biden's $1.9 trillion stimulus package continues its laborious passage through Congress. It was passed by the House of Representative last week, albeit without House Speaker Nancy Pelosi's increase in the minimum wage to $15/hour. It now goes back to the Senate, where Vice-President Kamala Harris may well have to cast her tie-breaking vote to get it through the upper house again. Then it goes back to the House for final approval, hopefully before the self-imposed deadline of Mar 14. Tesla stock tumbled last week on news that Bitcoin had fallen sharply. It was widely reported that Tesla had taken a $1,5 billion punt in Bitcoin and when the cryptocurrency fell sharply last week, the knock-on affect on Tesla was profound. From its peak of $883.09 on Jan 26, the Tesla share price has fallen by 23.5% to the current level of $675.5. The S&P 500 closed 2.4% down for the week at 3 811.15 on Fri 26 Feb. It has risen by 70.3% from its Mar 23 2020 closing low of 2 237.4. Although US long bond yields retreated somewhat from recent highs, equity market participants remains wary about the likely trajectory of inflation and interest rates.

Ghana became the first country to receive coronavirus vaccines through the Covax vaccine-sharing initiative last week. A delivery of 600,000 doses of the AstraZeneca vaccine, produced by the Serum Institute of India arrived in Accra on Wed. The first recipients are due to be healthcare workers. This is the same source of AstraZeneca vaccine that South Africa turned down and either sent back or offered to other AU countries. The Covax programme plans to deliver about two billion vaccine doses globally by the end of the year. Ghana, with a population of over 30 million, was chosen as the first recipient of the free vaccines after promising quick distribution and meeting the criteria set by Covax. Vaccinations are expected to start in Ghana next week, and, as well as health workers, those over 60, people with underlying health conditions, and senior officials are due to be prioritised. The US Food & Drug Administration (FDA) gave the Johnson & Johnson single-dose vaccine emergency approval last week, following approvals given by the FDA to the Pfizer/BioNtech and Moderna vaccines. Recent clinical trials in the UK demonstrate that the AstraZeneca/Oxford University vaccine is probably the most effective of all vaccines in preventing severesickness from Covid. This vaccine has been shown to be 94% effective in preventing severe sickness from Covid compared with 89% for the Pfizer/BioNtech vaccine. AstraZeneca has not yet filed an application for FDA approval in the US, as it is still awaiting completing of trials in that country. Meanwhile South Africa received its first doses of the Johnson & Johnson one-dose vaccine last week. An SAA plane collected another 80 000 doses from Brussels and returned on Sat morning. This brings the total number of Johnson & Johnson doses to 160 000.

British prime minister Boris Johnson presented his roadmap out of lockdown last week, with middle to late June being the target date by which time most restrictions currently in place can be lifted. Scottish First Minister Nicola Sturgeon demonstrated a similarly-paced timetable. Immediately after the roadmap was revealed, travel agents and airlines were inundated with bookings from would-be travellers wishing to get away for holidays in the northern hemisphere summer. Meanwhile the UK's vaccine rollout continues largely unabated, although a few supply disruptions have slowed the overall rate of vaccination down a little. Nevertheless, the total number of first inoculations of the Covid vaccine is fast approaching 20 million people and the UK government confidently predicts that first doses will have been offered to the entire adult population by July. UK Chancellor of the Exchequer Rishi Sunak delivers his budget next Wed 3 Mar with widely-telegraphed indications of further stimulus but also the spectre of stealth tax increases caused mainly by the imposition of bracket creep, sometimes referred to as fiscal drag. Brent crude closed above $67/bbl for first time in 13 months last week and a number of observers have raised their expectations for the world's largest commodity this year. The steady rollout of coronavirus vaccines should lead to a sustained improvement in global growth which in turn should improve demand for oil. However, the price still hinges to a large extent on the ability of OPEC to keep its member producers in line. The OPEC+ alliance is set to meet next week to decide how to proceed with the production cuts in April, with the group leaders Saudi Arabia and Russia reportedly at odds over oil supply management French hotel giant Accor recorded a massive loss in 2020. Earnings before interest, taxation, depreciation and amortisation (EBITDA) slumped from EUR825 million in 2019 to EUR-319 last year. Management is confident of a very strong rebound next year as the vaccine rollout gathers pace. And there remains the possibility of a merger between Accor and arch-rival IHG group. Meanwhile in South Africa, City Lodge Hotel Group released its first half results to end Dec 2020. This well-managed group has suffered badly due to the pandemic, not just in its own backyard of South Africa but also in its east African hotels, which rely on inbound international tourism to a large extent. The SA Reserve Bank (SARB) has given the green light for SA's commercial banks to resume dividend payments and cash bonus payments to executives, albeit while exercising prudence. Most of the large commercial banks had already compiled their year end financials when this message from the SARB came through, so it will be interesting to see how many of them take advantage of it and resume dividends and cash bonus payments to their executives. The JSE All Share Index (Alsi) closed 2% down at 66 138 on Friday 26 Feb. It reached a new all-time high of 67 711 on 16 Feb. From its recent low point of 37 693 on Mar 19 2020, it has risen by 75.5%.

The Fragile Five + Russia
Country GDP Growth (%) Inflation (%) Unemployment (%) Interest Rates (%)
South Africa -6 3.2 32.5 9.1
Brazil -3.9 4.56 13.9 8.19
India 0.4 4.06 6.5 6.23
Indonesia -2.07 1.55 7.07 6.6
Turkey 6.7 14.97 12.9 13.02
Russia -3.1 5.2 5.8 6.82
Source: Trading Economics

JSE listed company results out this week;

  • 2 March 2021
    • SAC, WBHO
    • 3 March 2021
      • VVO, ARI
      • 4 March 2021
        • Momentum, Santam, FirstRand, Grindrod, Libhold
        • 5 March 2021
          • MPact
          • 8 March 2021
            • Metrofile, Bidvest, AVI, Alphamin, Alviva, Merafe, Massmart

            Economic data releases this week;

            • 2 March 2021
              • NAAMSA New Vehicle Sales February, Absa Manufacturing PMI February
            • 3 March 2021
              • IHS Markit PMI February
            • 5 March 2021
              • SA Forex Reserves February




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