Not a member? Register | Lost your password?

Weekly Market Focus - 24 June 2019

Markets

WEEKLY FOCUS: Soft economic data keeps treasury yields low                                                             24 June 2019
 

 

Dovish messages by the US Federal Reserve and the ECB powered risk assets higher last week. The S&P500 made all-time highs, the DAX and the CAC40 closed 2% and 3% higher respectively and the Shanghai Composite index closed higher 4% for the week. Oil prices jumped following geopolitical tensions, the Eurodollar rallied to 1.14 and bond yields keep pushing lower on growth and inflation worries (chart above). At the ECB forum in Sintra on Tuesday, President Draghi hinted at measures to combat soft growth and falling market expectations of inflation numbers. There could be a further reduction in interest rates, the extension of forward guidance but more importantly the restart of the quantitative easing program. On Wednesday, the US FED meeting minutes also pointed towards rate cuts during the second half of the year. This tallies with our non-consensus call at the start of the year that economic data would slow in quarter 2 and 3 due to higher comparative base effects.

 

The telephone conversation between the US and Chinese leaders on the resumption of trade discussions helped risk sentiment. However, many analysts are now more cautious and are weighing whether President Trump is assessing the political gains of escalating tensions with China as he enters an election year compared to the resulting economic costs. Reports on the Chinese side also indicate that they will impose the removal of existing sanctions as a pre-condition to a deal implying it will be difficult to reach a consensus.

 

The US Empire Business survey and German ZEW expectations nosedived and preliminary estimates of manufacturing PMIs, which has a high correlation to GDP growth, showed deceleration in the US and continued weakness in Germany which has contracted for 5 consecutive months. Market expectations that the G20 meeting will result in some form of agreement, similar to the Shanghai accord of 2016, to spur growth remains high.

 

  

 

 

 

 

 

 

 

 

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,950

2.20%

18.70%

S. Africa

3,571

1.85%

9.99%

Stoxx50

33

1.65%

16.25%

FTSE100

7,408

0.84%

10.00%

DAX

12,340

2.01%

16.87%

CAC40

5,528

2.99%

18.16%

Swiss Mkt.

9,923

0.76%

17.72%

FTSE MIB

21,389

3.77%

16.72%

Shanghai Comp

3,002

4.16%

20.37%

BSE Sensex

39,194

-0.65%

8.64%

Nikkei

21,259

0.67%

6.21%

Major currencies

 

 

 

USDZAR

14.33

-3.47%

-0.73%

EURUSD

1.14

1.42%

-0.61%

GBPUSD

1.27

1.19%

0.28%

USDCHF

0.98

-2.26%

-0.80%

EURCHF

1.11

-0.89%

-1.47%

USDJPY

107.31

-1.15%

-2.69%

EURGBP

0.89

0.22%

-0.91%

USDAUD

1.44

-0.74%

1.73%

Dollar Index

95.72

-1.90%

-0.26%

 Commodities 

 

 

 

Brent

65.20

5.14%

24.90%

WTI Oil

57.43

9.37%

26.69%

Copper

2.70

2.74%

0.71%

Aluminum

 1,768.00

0.33%

3.10%

Platinum

809.45

0.73%

2.43%

Sugar

12.22

-4.16%

-1.37%

Corn

442.25

-2.37%

17.78%

Coffee

99.80

3.96%

-1.14%

Gold

1,396.20

4.19%

8.29%

Cotton

61.66

-6.58%

-14.68%

 Sovereign Yields

 

 

 

US10Y

2.06

(0.02)

(0.66)

UK10Y

0.84

0.00

(0.42)

Germany10Y

(0.28)

(0.03)

(0.52)

 

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

 

 



Twitter
Facebook
Connect with us