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Weekly Market Focus - 02 September 2019

MARKETS

WEEKLY FOCUS: Risk assets benefit from de-escalation of trade tensions                                          02 September 2019
 

 

Last week global equity indices rallied and the S&P500 had its best week in 3 months. A rise by over 4% in shares of UPS boosted the industrial sector which performed best during the week. Defensive sectors like utilities and real estate lagged but still ended the week higher. An increase by 0.6% in retail spending was the fastest pace in three months but a fall in consumer confidence measured by the University of Michigan showed a drop to levels of 2016; trade tensions may be affecting morale although so far, this is not showing in the hard data as figures on employment, wage growth and an array of measures of demand remain at cyclical highs. The near term picture however remains an ongoing slowdown from cyclical highs which should help growth increase sequentially next year as base effects improve. In this context, the defensive sectors like utilities, real estate, staples and long term treasuries have outperformed over the past 12 months and should maintain the trend in the next months. (chart above)

 

In the UK, Prime Minister Johnson suspended parliament for one month in an attempt to increase his bargaining position against his EU counterparts ahead of the Oct 31 Brexit deadline. This remains a high risk strategy however as a vote of confidence leading to elections may be a possibility. Furthermore groups in Scotland may mount a legal challenge to a no-deal exit from the EU.  

 

In Italy, stocks rallied after the formation of a new coalition government and in Germany the export centric DAX benefitted from a de-escalation of trade tensions between the US and China. Economic data remained subdued as exports fell more than imports and investment in construction declined markedly. The IFO business climate index fell to its lowest level since 2012 with underlying data showing the engineering, chemicals and electrical sectors remain under pressure. Apart from the likely monetary easing by the ECB on 12 September, a fiscal boost to the German economy is long overdue.  

 
  Value Week YTD

Equity Indices

 

 

 

S&P500

2,926

1.67%

16.74%

S. Africa 40

5,553

2.62%

5.62%

Stoxx50

3,440

2.68%

14.56%

FTSE100

7,304

2.87%

8.48%

DAX

11,980

2.72%

13.42%

CAC40

5,498

2.70%

16.17%

SMI Index

9,940

2.26%

17.87%

FTSE MIB

21,552

4.18%

17.56%

Shanghai Comp

2,924

2.11%

17.25%

BSE Sensex

37,333

-0.43%

3.51%

Nikkei

20,620

1.77%

3.02%

Major currencies

 

 

 

USDZAR

15.19

-0.66%

5.75%

EURUSD

1.10

-1.22%

-4.39%

GBPUSD

1.21

-1.11%

-5.31%

USDCHF

0.99

1.25%

0.97%

EURCHF

1.09

0.01%

-3.47%

USDJPY

106.34

0.19%

-2.96%

EURGBP

0.91

-0.09%

0.98%

USDAUD

1.49

0.75%

4.86%

Dollar Index

99

1.03%

3.41%

 Commodities 

 

 

 

Brent

59.11

0.65%

9.81%

WTI Oil

55.03

2.59%

21.18%

Copper

2.55

-0.08%

-3.70%

Aluminum

1,744.75

-0.54%

-4.28%

Platinum

933.85

8.72%

16.50%

Sugar

11.16

-2.36%

-7.23%

Corn

369.12

2.96%

-1.57%

Coffee

96.58

2.58%

-5.17%

Gold

1,534.05

-0.22%

16.86%

Cotton

58.88

1.92%

-18.53%

 Sovereign Yields

 

 

 

US10Y

1.50

-2.54%

-44.19%

UK10Y

134.67

0.34%

9.33%

Germany10Y

-0.69

3.62%

-379.27%

 

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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