Sasfin : Taking Stock - Netflix shares fall 20%.

MARKET COMMENTARY

SOUTH AFRICAN MARKET COMMENTARY

The benchmark All-Share index ended up 0.07% to 76,233 points and the blue-chip Top 40 index was up 0.11% to end at 69,587 points. Higher precious metal prices boosted the Johannesburg Stock Exchange but a fall across stocks linked to the local economy such as banks, industrials and real estate counters kept the run under check and the indices. Harmony gold was the best performing Top 40 company after it added 9.10% on the day. The group was followed closely by Gold Fields and Anglogold, which added 8.28% and 8.09% respectively.

EUROPEAN MARKET COMMENTARY

European stocks closed higher Thursday as investors appeared to brush off concerns about rampant inflation. The pan-European Stoxx 600 ended the day up 0.4%, wrapping up a choppy session. Travel and leisure shares led the gains, climbing 2.7%, while autos sank 0.9%. British food delivery firm Deliveroo climbed 1.4% after reporting a 70% jump in the total value of orders in 2021. Meanwhile, Dutch tech investment firm Prosus, meanwhile, climbed 6.5% after Goldman Sachs resumed coverage of the stock with a "buy" rating.

US MARKET COMMENTARY

US indices moved lower on Thursday, giving up their sharp gains from earlier in the session, as Wall Street continues to struggle this year in a rising interest rate environment. Technology stocks, like Zoom Video and Tesla, led markets higher for most of the day on Thursday. However, many lost steam towards the end of the session. Netflix closed down about 1.5% before its quarterly earnings slated for after the bell. Peloton tanked 23.9% on news it is temporarily halting production of its connected fitness products as consumer demand wanes, according to internal documents obtained by CNBC.

ASIAN MARKET COMMENTARY

Asia-Pacific markets fell this morning, tracking declines on Wall Street overnight. Japan's inflation data released earlier today showed that core consumer prices rose 0.5% in December compared to a year earlier, as fuel and raw material costs increased, according to Reuters. The increase was for a second month straight at the fastest pace in nearly two years, Reuters said.

CURRENCY MARKET COMMENTARY

The rand forged higher on Thursday, extending strong gains made a day earlier when inflation figures bolstered the case for the central bank to raise interest rates next week. The rand was trading around R15.24 to the dollar at the close of the session, 0.61% firmer. The South African Reserve Bank's first rate decision of 2022 is due on January 27th, with economists polled by Reuters predicting a 25 basis point increase in the repo rate to 4.00% and three further hikes before the end of the year.

COMMODITIES MARKET COMMENTARY

Gold prices were muted earlier today and were on course for a second consecutive weekly gain, as investors turned to safe-haven assets while awaiting signals on interest rate hikes from the U.S. Federal Reserve's meeting next week. Meanwhile, oil prices plunged earlier today, after rising to seven-year highs this week, as an increase in U.S. crude and fuel stockpiles prompted investors to take profits from the rally.

LOCAL COMPANIES

Woolworths Holdings (WHL) -1.6%

Despite traditionally being the group's most resilient and best performing division, the food unit of JSE-listed Woolworths has shown a material slowdown in growth. This is revealed in Woolworths's latest trading update for the 26 weeks ended December 2021, published on Thursday morning. The retail company is best known for its food segment in South Africa, which, until now, has been its star performer. However, its latest half-year turnover and sales figures show that the group's historically poor-performing fashion, beauty and homeware (FBH) business has managed to grow faster than Woolies Food. Woolworths warned in its trading update that it expects to see its headline earnings per share (Heps) for the period plunging by between 30% and 40% (156.7 cents to 182.8 cents). In November the retailer did warn that a profit slump of more than 20% was on the cards for the current period. The group reported that its turnover and sales for the period declined by 2.1%, despite significant online sales growth of 22.4%. As a result of the prolonged lockdown, the group's Australian business remains under pressure with its David Jones division reporting a 9.2% decline in turnover and a 9% decline in sales for the period. The Country Road brand also saw a decline in sales, albeit at a slower rate of -3.2%.

Stor-Age (SSS) -0.6%

Thursday saw self-storage property fund Stor-Age announce the acquisition of a portfolio of four more properties in the UK that will largely be funded through its successful R575 million capital raise on the JSE. The rights issue, which was also announced and finalised on Thursday, was significantly oversubscribed. Stor-Age had initially targeted an accelerated bookbuild of R550 million. According to the group, the new equity was raised at a price of R14.30 per share, representing a 0.92% discount to the 30-day volume weighted average traded price of its share. "The capital raised will support the finalisation of the UK acquisition, while also enabling the group to continue taking advantage of development and acquisition opportunities in both South Africa and the UK," it said in a statement. Meanwhile, in the quarter ending December 31, 2021, the total occupancy in its same store portfolio increased by 10 500m² (2.6%) while the closing average rental rate increased by 1.6% (annualised 6.3%) and 1.5% (annualised 6%) in SA and the UK respectively. During the period, it completed the acquisition of Silver Park Self Storage (Cape Town northern suburbs) and Green Cube Self Storage (Cape Town southern suburbs). It also announced, in September 2021, a joint venture with Nedbank Property Partners to develop two high profile properties in Morningside and Bryanston at a cost of approximately R200 million.

INTERNATIONAL COMPANIES

Netflix (NFLX) -1.5%

Netflix reported fourth-quarter earnings after the bell on Thursday. The streamer beat on both the top and bottom lines, but shares plunged more than 20% in after-hours trading, to the lowest levels since June 2020, on slowing subscriber growth. Netflix added 8.28 million global paid net subscribers in the fourth quarter. Analysts had expected the company to add 8.19 million, according to StreetAccount estimates. But that's fewer than the 8.5 million subscribers Netflix added in Q4 2020, the same figured it had forecasted for Q4 2021, and its outlook was worse. Netflix said it expects to add 2.5 million subscribers during the first quarter of 2022, far below the 3.98 million it added in Q1 2021. Meanwhile, analysts had expected 6.93 million in the first quarter, according to StreetAccount estimates.

Airbus (AIR) +0.5%

Airbus on Thursday raised the stakes in a dispute with one of its largest customers, Qatar Airways, over grounded and undelivered A350 jets by announcing it had revoked a separate contract for 50 smaller A321s the airline needs to open new routes. The move is expected to deepen a dispute that moved closer towards a rare courtroom clash on Thursday, with a procedural hearing over Qatar's claim for $600 million in compensation over A350 flaws pencilled in for the week of April 26 in London. Airbus revealed it was walking away from the contract for A321neos in skeletal arguments presented during a scheduling session over the A350 dispute at a division of Britain's High Court on Thursday, people familiar with the matter said.

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