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Weekly Market Focus - 11 February 2019

Markets

WEEKLY FOCUS: Earnings of corporations remain strong despite headwinds                                   11 February 2019
 

 

Most major indices ended the week in the red as the markets took a pause to digest the spurt higher since the start of the year. The main catalyst seems to have been the currency markets as the US dollar fell and the correlation between the S&P500 and the broader dollar index closed the week at 45%. If the S&P500 recaptures its 200 day moving average in the coming weeks, it would constitute a short term tailwind for risk assets.

 

So far, two thirds of the companies within the S&P500 have reported a positive earnings surprise and 62% had reported a positive revenue surprise for Q4 2018. The blended earnings growth rate is 13.3% and represents the fifth straight quarter of double digit growth. Unsurprisingly, companies having above 50% of their total sales in the US have reported double the earnings of companies with lower sales in the US. Analysts expect the ratio to actually triple for this calendar year as the US continues to outperform Europe and emerging economies. At the sector level (excluding energy) communication services, industrials, consumer discretionary and healthcare have registered double digit growth and beaten analysts’ expectations. The margin for the index is at 11.3% compared to 10.7% a year ago and 8 sectors out of 11 have better year on year margins. Even if the growth in revenue and earnings looks set to slow this year as comparative base effects steepen, the fundamental picture remains positive.

 

January car registration data for the Eurozone, a key indicator of general growth will be available later this week. Q4 GDP data for the UK is also awaited and could be softer on account of Brexit uncertainties and slower international growth. In the US, we may face another government shutdown next week if no deal is reached between the White House and Congress

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,708

0.05%

8.94%

S. Africa

3,278

-1.80%

0.94%

Euro Stoxx50

3,159

-0.12%

5.33%

FTSE100

7,071

0.73%

5.01%

DAX

10,907

-2.45%

3.29%

CAC40

4,962

-1.15%

6.05%

Swiss Mkt.

9,003

0.08%

6.81%

FTSE MIB

19,352

-1.15%

5.61%

Shanghai Comp

2,654

1.38%

6.42%

BSE Sensex

36,546

0.21%

1.30%

Nikkei

20,333

-2.19%

1.59%

Major currencies

 

 

 

USDZAR

13.63

2.27%

-5.57%

EURUSD

1.13

-1.10%

-0.94%

GBPUSD

1.29

-1.05%

1.90%

USDCHF

1.00

0.45%

1.62%

EURCHF

1.13

-0.64%

0.60%

USDJPY

109.73

0.21%

-0.50%

EURGBP

0.88

-0.10%

-2.82%

USDAUD

1.41

2.27%

-0.63%

Dollar Index

96.42

1.17%

0.47%

Commodities 

 

 

 

Brent

62.10

-1.04%

18.97%

WTI Oil

52.72

-4.60%

16.30%

Copper

2.81

1.37%

4.81%

Aluminum

1,879.75

0.58%

1.81%

Platinum

802.20

-2.87%

1.51%

Sugar

12.71

0.87%

2.58%

Corn

374.25

-1.06%

-0.33%

Coffee

102.60

-1.06%

1.63%

Gold

1,318.50

-0.27%

2.26%

Cotton

72.48

-1.56%

0.29%

Sovereign Yields

 

 

 

US10Y

2.63

(0.05)

(0.08)

UK10Y

1.15

(0.10)

(0.11)

Germany10Y

0.09

(0.08)

(0.15)

 

Contact us: Durban +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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