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Weekly Market Focus 12 November 2018

Markets

WEEKLY FOCUS: S&P500 – Investors remain long and bullish on growth                         12 November 2018
 

 

 

The mid-term election results were as predicted with the Republicans maintaining their grip on the Senate and the Democrats obtaining a majority in the House of Representatives. Although there is an increased possibility of a stand-off, the political situation should have a limited impact on markets.

 

90% of companies in the S&P500 have reported an impressive blended earnings growth of 25.2%, the highest level since Q3 2010. We have had 9 consecutive quarters of GDP growth accelerating sequentially in the US with the economy beating forecasts and reaccelerating when analysts felt the expansion was stretched. It does seem that maintaining such a trend is increasingly challenging. Investors are rightly worried about a correction to the equity indices of a re-pricing of risks. Other analysts advocate that a forecast slowdown in earnings growth for 2019 has been well telegraphed for some time and is priced in, but if you analyze data from the Commodities and Futures Trading Commission on net speculative positioning on investors in the S&P500, this is not evident (see chart above). Macroeconomic data in the US remains strong and the global economy is not as weak as some would tend to believe with the IMF forecasting global GDP growth of 3.7% for this year and 2019. The fact remains that increased adverse sentiment can impair business confidence and demand. This is why diversification tools will play an increased role in portfolio management in the coming quarters. 

 

This week, retail sales data for the US should confirm the US consumer remains strong while core inflation should stay around the 2.2% level. GDP data for Q3 in the EU will be scrutinized as well as German ZEW sentiment data for clues on future investment. In China data on money supply, credit, industrial production, investment and retail sales should indicate a bottoming process as the expansionary policies feed through the economy in the coming months.  

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,781

2.13%

2.50%

S. Africa

3,250

-0.77%

-14.05%

FTSE100

7,105

0.16%

-7.38%

DAX

11,529

0.09%

-11.17%

CAC40

5,107

0.09%

-4.21%

Swiss Mkt.

9,074

0.91%

-4.58%

FTSE MIB

19,258

-0.68%

-12.08%

Shanghai Comp

2,599

-3.72%

-17.86%

BSE Sensex

35,159

0.42%

4.04%

Nikkei

22,250

0.03%

-2.17%

Major currencies

 

 

 

USDZAR

14.33

0.15%

15.87%

EURUSD

1.13

-0.45%

-5.64%

GBPUSD

1.30

0.02%

-4.00%

USDCHF

1.01

0.19%

2.91%

EURCHF

1.14

-0.25%

-2.90%

USDJPY

113.83

0.56%

1.18%

EURGBP

0.87

-0.48%

-1.73%

USDAUD

1.38

-0.35%

8.44%

Dollar Index

96.73

0.40%

5.26%

 Commodities 

 

 

 

Brent

70.18

-3.64%

3.45%

WTI Oil

60.19

-4.67%

-2.34%

Copper

2.69

-4.14%

-16.99%

Aluminum

 1,956.50

0.35%

-12.36%

Platinum

855.60

-1.89%

-10.51%

Sugar

12.73

-5.28%

-16.85%

Corn

369.75

-0.40%

4.75%

Coffee

113.85

-5.16%

-11.47%

Gold

 1,206.40

-1.99%

-8.34%

Cotton

78.17

-0.77%

0.10%

 Sovereign Yields

 

 

 

US10Y

3.19

(0.03)

0.74

UK10Y

1.49

0.00

0.28

Germany10Y

0.41

(0.02)

(0.03)

 
Contact: 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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