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Weekly Market Focus 10 December 2018

Markets

WEEKLY FOCUS: Trade tensions are causing range-bound action in the S&P500                   10 December 2018
 

 

The trade truce between the US and China did not last long as an influential Huawei official was arrested in Canada and faces extradition to the US. The trade dispute has caused a spike of over 40% in the VIX index, a measure of volatility of the S&P500, since October and disconnected the market from its function of a growth discounting mechanism. The macroeconomic indicators in the US, however remain supportive and it has outperformed its global peers as emerging markets are in bear territory and the DAX and CAC40 have lost 16% and 10% respectively for the year. Moreover, a negative return for the year by the S&P500 after being 10% higher would be unprecedented in its history but a successful retest of the 2,800 level is key for the bull-run to resume.

 

The US Retail sales control group data, an indicator of consumer spending to be released on Friday should confirm the current strong trend and the preliminary manufacturing PMI should stabilize around its current levels. In the EU, the ECB should announce an end to its bond buying program this week and reaffirm its broadly balanced outlook on growth and inflation. The composite manufacturing PMI is unlikely to have improved on account of negative order-inventory balance. Car registrations data will also show whether production bottlenecks as result of compliance with emission standards have eased as German Q3 GDP data was affected significantly by this in September. In the UK, probabilities of scenarios on the Brexit process remain speculative and are overshadowing economic data analysis. In China, data on M1 (money supply) should indicate that the economy will pick up by Q2_2019.

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,633

-4.60%

-2.95%

S. Africa

3,179

0.15%

-15.95%

FTSE100

6,778

-2.90%

-11.64%

DAX

10,788

-4.17%

-16.88%

CAC40

4,813

-3.81%

-9.72%

Swiss Mkt.

8,741

-3.28%

-8.08%

FTSE MIB

18,742

-2.33%

-14.44%

Shanghai Comp

2,606

0.68%

-22.65%

BSE Sensex

35,673

-1.44%

5.56%

Nikkei

21,679

-3.01%

-6.79%

Major currencies

 

 

 

USDZAR

14.16

2.11%

14.54%

EURUSD

1.14

0.54%

-5.29%

GBPUSD

1.27

-0.18%

-5.82%

USDCHF

0.99

-0.84%

1.37%

EURCHF

1.13

-0.30%

-4.00%

USDJPY

112.73

-0.65%

0.20%

EURGBP

0.89

0.77%

0.55%

USDAUD

1.39

1.63%

8.81%

Dollar Index

96.48

-0.74%

4.98%

Commodities 

 

 

 

Brent

61.67

5.04%

-9.09%

WTI Oil

52.61

3.30%

-14.64%

Copper

2.76

-1.00%

-14.74%

Aluminium

1,961.75

-0.92%

-12.13%

Platinum

794.30

-0.84%

-16.92%

Sugar

12.87

0.23%

-15.94%

Corn

374.00

2.05%

5.95%

Coffee

104.05

0.77%

-19.09%

Gold

1,252.60

2.17%

-4.83%

Cotton

80.25

1.80%

2.77%

Sovereign Yields

 

 

 

US10Y

2.86

(0.14)

0.41

UK10Y

1.27

(0.10)

0.05

Germany10Y

0.25

(0.06)

(0.19)

 
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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