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Weekly Market Focus 09 July 2018

Markets

WEEKLY FOCUS       09 July 2018

The escalating trade war between the US and the rest of the world has seen the Shanghai Composite index in China enter bear market territory while equity indices in Europe are off their highs of the year and are struggling to make further gains.

The US economy appears strong, however: Employment gains, driven by full time jobs which reached an all-time high in June, has averaged 197,000 over the past year. Wage growth is at its highest level in the past 10 years and measures of demand like retails sales or personal consumption growth indicate an improvement of between 2% to 3% year on year. The first quarter GDP growth was the highest in nearly 3 years.

 

The housing market indicators also remain bullish with housing starts for May at their highest level in 11 years. The manufacturing segment of industrial production also posted solid growth and the PMI readings show expansion. US corporations also continue to post solid sales and earnings growth as indicated in the chart above and the forecasts made by analysts for the coming quarters remain encouraging.

 

The headwind seems to be financial indicators, where the spread on the 10 year minus 2 year sovereign yields is now 28 cents, a sign that we risk having an inverted yield curve if the FED were to hike rates again. It would therefore make sense to scrutinize and have exposure to companies or sectors which have comparatively better fundamental data and growth potential in the current conditions.

 

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,760

1.52%

3.22%

S. Africa

3,505

0.22%

-7.53%

FTSE100

7,618

-0.25%

-0.91%

DAX

12,496

1.55%

-3.26%

CAC40

5,376

0.98%

1.19%

Swiss Mkt.

8,697

1.02%

-6.84%

FTSE MIB

21,926

1.38%

0.33%

Shanghai Comp

2,747

-3.52%

-16.93%

BSE Sensex

35,658

0.66%

4.70%

Nikkei

21,788

-2.32%

-4.29%

Major currencies

USDZAR

13.47

-1.87%

8.87%

EURUSD

 1.17

0.53%

-2.09%

GBPUSD

 1.33

0.58%

-1.70%

USDCHF

0.99

-0.08%

1.59%

EURCHF

1.16

0.44%

-0.53%

USDJPY

110.46

-0.20%

-1.98%

EURGBP

0.88

-0.06%

-0.41%

USDAUD

1.35

-0.39%

4.96%

Dollar Index

93.77

-0.61%

2.11%

Commodities

Brent

77.11

-2.93%

15.31%

WTI Oil

73.80

-0.47%

22.14%

Copper

2.81

-4.68%

-14.24%

Aluminum

2,087.50

-2.20%

-8.26%

Platinum

847.00

-1.16%

-9.37%

Sugar

11.51

-2.95%

-24.08%

Corn

351.75

0.43%

0.29%

Coffee

111.25

-0.22%

-11.85%

Gold

1,254.30

0.24%

-4.20%

Cotton

84.37

-1.18%

7.52%

Sovereign Yields

 

 

 

US10Y

 2.82

(0.04)

0.42

UK10Y

1.27

(0.01)

0.08

Germany10Y

0.30

(0.01)

(0.13)

Contact us: DBN +27 ( 0 ) 31 566 3365 | CPT +27 ( 0 ) 21 851 0920 | JHB +27 ( 0 ) 11 017 7230 | Email:enquiries@pegasuswm.com

Disclaimer: The research report has been prepared for information purposes and does not constitute an offer. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and the company accepts no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this report

 

 



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