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Weekly Market Focus - 29 July 2019

MARKETS

WEEKLY FOCUS: Economic data points to continued but slower growth                                          22 July 2019
 

 

The bullish pattern in the S&P500 continued last week with the index reaching new highs after 3 in 4 corporations reported better than forecast earnings for the second quarter. Alphabet, the parent company of Google surge 10% after better than expected earnings and the announcement of a buyback program. The communication services sector was also boosted by good results from Twitter and the approval by the Justice department of the merger between T-Mobile and Sprint.

 

The industrial sector was however affected by losses at Boeing due to delayed deliveries of its 737 aircrafts and Caterpillar which also revised guidance lower on Wednesday. Investment sentiment was buoyed by the possible restart of trade talks between the US and China and a better than expected GDP annualized growth of 2.1% for the quarter. Jobless claims figures also fell sharply and durable goods orders when stripped of transportation (affected by Boeing) rose more than analysts’ estimates. Existing home sales and the Manufacturing PMI data were however soft as was the case in Germany and France. This paves the way for a cut of a quarter percentage point in Fed fund rates on Wednesday, the first in the ten years (chart above).

 

Mario Draghi, ECB’s President sounded a dovish tone at his press conference to counter an economy turning ‘worse and worse’. Investors were unfazed by the lack of clarity on further large scale asset purchases on account of a lack of support from the governing council according to Draghi and will await for more details after the Sep 12 meeting.

 

As earnings season progresses this week, it is becoming apparent that corporation with a larger proportion of revenues outside of the US are suffering from a higher dollar and a slower global economy. Estimates by Factset are for a decline of their earnings by 13% whereas companies focusing on the US should grow their earnings by over 3%.

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

3,026

1.65%

21.73%

S. Africa

3,452

-1.57%

6.33%

Stoxx50

3,524

1.27%

17.43%

FTSE100

7,549

0.54%

12.10%

DAX

12,420

1.30%

17.62%

CAC40

5,610

1.04%

19.91%

SMI Index

9,968

0.31%

18.26%

FTSE MIB

21,838

0.91%

19.18%

Shanghai Comp

2,945

0.70%

18.07%

BSE Sensex

37,883

-1.18%

5.01%

Nikkei

21,658

0.89%

8.21%

Major currencies

 

 

 

USDZAR

14.30

2.55%

-0.93%

EURUSD

1.11

-0.85%

-2.72%

GBPUSD

1.24

-0.95%

-2.55%

USDCHF

0.99

1.19%

0.93%

EURCHF

1.11

0.34%

-1.86%

USDJPY

108.67

0.88%

-1.46%

EURGBP

0.90

0.11%

-0.20%

USDAUD

1.45

1.92%

1.93%

Dollar Index

97.75

0.96%

1.86%

 Commodities 

 

 

 

Brent

63.46

1.58%

21.57%

WTI Oil

56.20

1.02%

23.98%

Copper

2.69

-1.90%

0.30%

Aluminum

1,804.75

-1.42%

1.00%

Platinum

868.60

2.25%

9.91%

Sugar

12.02

3.71%

-2.99%

Corn

414.50

-3.77%

10.39%

Coffee

99.75

-6.88%

-1.19%

Gold

1,418.60

-0.54%

9.49%

Cotton

64.46

-3.54%

-10.81%

 Sovereign Yields

 

 

 

US10Y

2.07

0.02

(0.64)

UK10Y

0.69

(0.05)

(0.58)

Germany10Y

(0.38)

(0.06)

(0.61)

     
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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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