Sanlam Private Wealth Morning Digest 25 February 2021

Local Markets

Local stocks reacted positively to yesterday`s budget speech, with the both the Johannesburg Stock Exchange`s Top-40 Index and the All-Share Index rising 0.4%. The budget made space for up to 19.3 billion rand ($1.3 billion) of spending on coronavirus vaccines and forecast a deficit of 14% of gross domestic product this fiscal year. Analysts praised pledges to stabilise debt at a lower level than previously forecast and continue with efforts to rein in public sector salaries, but they said deficit projections were still worryingly large.

American Markets

The stock market staged another big intraday comeback on Wednesday as investors continued to pile into names sensitive to an economic comeback, while looking past the risk of inflation and rising interest rates. Technology stocks sold off earlier in the day as the 10-year Treasury yield topped 1.4% to hit its highest level since February 2020. Higher interest rates could prompt investors to rotate out of high-flyers and into bonds, while they could hamstring growth companies, which benefited from the low-rate environment. Apple, Amazon and Facebook closed in the red but well off their lowest levels.