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Weekly Market Focus - 28 January 2019

Markets

WEEKLY FOCUS: Investor participation is strong as fundamentals are supportive                        28 January 2018
 

 

The S&P500 has gained 13% since Christmas and Emerging market indices have also rebounded strongly posting a 4 month high last week. Fundamental data continues to be positive and the uptrend has been broad. The only flash point in US financial indicators is the Sovereign spread between the 10 and 2 year which currently stands at 15 basis points. An explanation for this is that a hawkish FED relies on lagging indicators in its models and this has caused the front end of the curve to steepen. As economic data slows sequentially during the coming quarters, the FED’s model would automatically turn neutral. In the EU, it is unlikely that the ECB will have the luxury of being hawkish as leading indicators such as manufacturing PMIs are decelerating.

 

The IMF released its World Economic Outlook last week and trimmed global growth for the next 2 years marginally citing headwinds from trade tensions, a slowdown in China, uncertainty about policy agenda of new administrations, the protracted US government shutdown and geopolitics in the Middle East. Although the outlook could be better, it is clear that global growth of 3.5% is far from the recessionary environment some have been forecasting. China will continue to contribute a massive one third of global growth and advanced economies are forecast to growth by a healthy 2%.   

 

Q4 GDP data for the EMU and the US will be released this week as well as jobs and inflation data which should be within trends. The other event scrutinized by markets is trade talks between the US and China and Brexit debates which are likely to result in an extension of the UK exit date.

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,665

-0.22%

7.20%

S. Africa

3,368

0.87%

3.74%

FTSE100

6,809

-2.28%

1.12%

DAX

11,282

0.68%

6.85%

CAC40

4,926

1.02%

5.28%

Swiss Mkt.

8,922

-1.12%

5.85%

FTSE MIB

19,811

0.52%

8.11%

Shanghai Comp

2,602

0.22%

4.32%

BSE Sensex

36,026

-0.99%

-0.14%

Nikkei

20,774

0.52%

3.79%

Major currencies

 

 

 

USDZAR

13.62

-1.64%

-5.64%

EURUSD

1.14

0.46%

-0.20%

GBPUSD

1.32

2.55%

3.90%

USDCHF

0.99

-0.26%

0.89%

EURCHF

1.13

0.16%

0.59%

USDJPY

109.55

-0.21%

-0.66%

EURGBP

0.86

-2.08%

-4.02%

USDAUD

1.39

-0.18%

-1.92%

Dollar Index

95.47

-0.55%

-0.52%

Commodities 

 

 

 

Brent

61.64

-1.69%

18.08%

WTI Oil

53.69

-0.20%

18.44%

Copper

2.73

0.37%

1.75%

Aluminum

1,912.75

0.79%

3.60%

Platinum

820.65

2.54%

3.85%

Sugar

12.44

-4.53%

0.40%

Corn

380.25

-0.39%

1.26%

Coffee

106.80

1.76%

5.79%

Gold

1,298.10

1.21%

1.18%

Cotton

74.17

0.27%

2.63%

Sovereign Yields

 

 

 

US10Y

2.76

(0.03)

0.04

UK10Y

1.31

(0.05)

0.04

Germany10Y

0.19

(0.07)

(0.04)

   
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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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