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Weekly Market Focus 23 July 2018

Markets 

WEEKLY FOCUS   23 July 2018

  

A business cycle is composed of periods when GDP growth is accelerating sequentially and vice versa. Although growth is still positive during the period of deceleration, the stock market prices tend to react in ways which are not necessarily coherent with the fundamental factors of each underlying companies.


Year on year GDP growth in the US accelerated from 2013 to reach a peak of over 3% towards the end of 2015 following which it decelerated to close to 1%. The performance of sectors as represented by their respective ETFs is indicated in the blue bars which shows Utilities, a defensive segment leading with over 20% gain while growth sectors lagged. It is interesting to note that the price return of the long term US treasury bonds ETF (TLT) was 15% as GDP growth decelerated. However as growth accelerated, the red bar shows that technology and financials performed better.


In the coming quarters, GDP comparative base effects represent a higher hurdle and we may therefore have a situation of sequential growth deceleration during which the above pattern is one factor (of many) to consider in asset allocation.

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,802

0.02%

4.80%

S. Africa

3,496

1.07%

-7.78%

FTSE100

7,679

0.22%

-0.12%

DAX

12,561

0.16%

-2.76%

CAC40

5,398

-0.57%

1.61%

Swiss Mkt.

8,991

1.47%

-4.45%

FTSE MIB

21,795

-0.45%

-0.27%

Shanghai Comp

2,829

-0.07%

-14.45%

BSE Sensex

36,496

-0.12%

7.16%

Nikkei

22,698

0.44%

-0.29%

Major currencies

USDZAR

13.41

1.03%

8.35%

EURUSD

1.17

0.30%

-2.32%

GBPUSD

1.31

-0.76%

-2.82%

USDCHF

0.99

-0.91%

1.87%

EURCHF

1.16

-0.62%

-0.48%

USDJPY

111.41

-0.86%

-1.14%

EURGBP

0.89

1.05%

0.51%

USDAUD

1.35

0.01%

5.10%

Dollar Index

94.23

-0.29%

2.61%

Commodities 

Brent

3.07

-3.00%

9.27%

WTI Oil

70.46

-0.77%

16.62%

Copper

2.75

-0.87%

-16.28%

Aluminum

2,045.50

-1.79%

-10.11%

Platinum

828.90

-0.34%

-11.31%

Sugar

11.12

1.46%

-26.65%

Corn

355.25

7.57%

1.28%

Coffee

110.65

3.36%

-12.32%

Gold

1,231.90

-0.62%

-5.91%

Cotton

87.11

-0.85%

11.01%

Sovereign Yields

 

 

 

US10Y

2.90

0.07

0.49

UK10Y

1.23

(0.04)

0.04

Germany10Y

0.37

0.09

(0.05)

 

 

 

 

   
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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