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Weekly Market Focus 26 November 2018

Markets

WEEKLY FOCUS: S&P500 – Falling oil prices may impact inflation data                                          26 November 2018 
 

 

 

In the US, the Personal Consumption Index inflation numbers will be released this Thursday. This data series is regarded as the FED’s preferred measure of inflation and is scrutinized for clues on the probable interest rate hiking cycle by the central bank. Just a couple of quarters ago, some analysts’ estimates were for the 10 year US treasury yield to edge towards the 4% level but it seems that the fall in oil prices might change the outlook. As the chart above shows, falling oil prices reduced year on year inflation growth during the 2014/15 period and the probability of a similar outcome is likely in the coming quarters. The Fed Chair Powell, has indicated that a gradual rate hike should continue and this is understandable considering looser fiscal policy. Moreover, it will be interesting to see what they do after reaching 3% if inflation stays at its current levels.

 

In Germany, business confidence indicators will be scrutinized for any possible impact of the last GDP data which was negative. The preliminary manufacturing PMIs have not been encouraging for both Germany and France. Inflation for October in the EU was however 2.2%, leaving little room for the ECB to change guidance. In fact, it is possible that they might proceed with unwinding the symbolical QE (bond purchases) of EUR 15 billion a month in December and be on target to raise interest rates next year.

 

The political situation in the UK remains challenging for Prime Minister May as she faces an uphill battle to obtain parliamentary approval of her Brexit plan. The vote by MPs is scheduled to take place on the 12 December and may be a short term headwind for markets.    

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,633

-3.79%

-2.97%

S. Africa

3,146

-1.62%

-16.81%

FTSE100

6,953

-0.87%

-9.36%

DAX

11,193

-1.31%

-13.76%

CAC40

4,947

-1.56%

-7.21%

Swiss Mkt.

8,846

-0.69%

-6.98%

FTSE MIB

18,715

-0.87%

-14.56%

Shanghai Comp

2,579

-3.72%

-23.44%

BSE Sensex

35,354

-1.18%

3.81%

Nikkei

21,795

-0.12%

-4.26%

Major currencies

 

 

 

USDZAR

13.86

-1.17%

12.09%

EURUSD

1.13

-0.69%

-5.60%

GBPUSD

1.28

-0.19%

-5.19%

USDCHF

1.00

-0.32%

2.01%

EURCHF

1.13

-1.01%

-3.71%

USDJPY

112.95

0.11%

0.40%

EURGBP

0.89

-0.49%

-0.44%

USDAUD

1.38

1.38%

8.27%

Dollar Index

96.83

0.51%

5.36%

 Commodities 

 

 

 

Brent

58.80

-11.92%

-13.33%

WTI Oil

50.42

-10.70%

-18.19%

Copper

2.79

-0.89%

-13.96%

Aluminum

1,942.25

0.10%

-13.00%

Platinum

843.10

-0.58%

-11.82%

Sugar

12.47

-1.73%

-18.55%

Corn

359.00

-1.58%

1.70%

Coffee

107.15

-4.84%

-16.68%

Gold

1,229.10

0.01%

-6.62%

Cotton

77.27

-1.32%

-1.05%

 Sovereign Yields

 

 

 

US10Y

3.05

(0.02)

0.60

UK10Y

1.38

(0.03)

0.17

Germany10Y

0.34

(0.03)

(0.10)

     
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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