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Weekly Market Focus - 10 June 2019

Markets

WEEKLY FOCUS: Global economic growth slows                                                                                   10 June 2019
 

 

Major indices rebounded strongly last week after US Federal Reserve Chair Powell pledged during a central bank conference on Tuesday that policymakers were monitoring the impact of trade tensions on the economy and would ‘act to sustain the economic expansion’. On Friday, President Trump who returned from his European trip walked back the proposed sanctions on Mexico and the S&P500 settled above its critical 200 day moving average level. A number of stocks which had suffered technical damage the week before regained their levels but some counters like Alphabet, Apple or Facebook did not rebound as much as Microsoft and remain in a buying range. The spread on the 10 year minus 2 year US treasuries widened by 2 basis points (bps) to a healthy 23 bps and shows that a recession is not on the cards.

 

Economic data is, however, slowing sequentially particularly in Europe and represents a short-term headwind. The Bundesbank cut its outlook for German GDP growth this year to a lacklustre 0.6%. Furthermore rising tension between the EU and Italy over budget deficit targets have escalated and could lead to an excessive deficit procedure which would widen sovereign yield spreads. Following in the footsteps of Chair Powell, ECB President Draghi suggested that the central bank had the tools to intervene if the slowdown persists. In the UK, Prime Minister May left the task of resolving the Brexit standoff to a new conservative leader who should be appointed in July.

 

Meanwhile the World Bank revised its global GDP growth projections (see chart above) citing lower business confidence and trade worries and the need for structural reforms. The report follows the same pattern of other institutions which indicated the global economy is growing but at a slower pace. 

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,873

4.41%

15.59%

S. Africa

3,505

2.96%

7.93%

Stoxx50

32

2.44%

13.86%

FTSE100

7,332

2.38%

8.88%

DAX

12,045

2.72%

14.08%

CAC40

5,364

3.00%

14.65%

Swiss Mkt.

9,749

2.36%

15.66%

FTSE MIB

20,361

2.82%

11.11%

Shanghai Comp

2,828

-2.45%

13.39%

BSE Sensex

39,616

-0.25%

9.81%

Nikkei

20,885

1.38%

4.35%

Major currencies

 

 

 

USDZAR

14.95

2.53%

3.63%

EURUSD

1.13

1.47%

-0.92%

GBPUSD

1.27

0.82%

0.23%

USDCHF

0.99

-1.32%

0.36%

EURCHF

1.12

0.01%

-0.62%

USDJPY

108.19

-0.08%

-1.90%

EURGBP

0.89

0.53%

-1.18%

USDAUD

1.43

-0.83%

0.63%

Dollar Index

96.49

-1.20%

0.55%

Commodities 

 

 

 

Brent

63.29

-1.86%

21.25%

WTI Oil

53.99

0.92%

19.10%

Copper

2.62

-0.27%

-2.16%

Aluminum

1,760.00

-2.44%

3.57%

Platinum

806.15

1.68%

2.01%

Sugar

12.50

3.31%

0.89%

Corn

415.75

-2.63%

10.72%

Coffee

100.95

-3.49%

0.00%

Gold

1,341.20

2.71%

4.03%

Cotton

66.09

-3.05%

-8.55%

Sovereign Yields

 

 

 

US10Y

2.08

(0.05)

(0.63)

UK10Y

0.81

(0.07)

(0.45)

Germany10Y

(0.26)

(0.05)

(0.49)

 

Contact us: Durban +27 (0) 31 566 3365 | CPT +27 ( 0 ) 21 851 0920 | JHB +27 ( 0 ) 11 017 7230 | Email: enquiries@pegasus-wm.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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