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Weekly Market Focus - 10 September 2019

MARKETS

WEEKLY FOCUS: Policy easing talks leads to a decline in volatility                                                      10 September 2019

 

It was another solid week in a row for equity indices as trade tensions between the US and China eased. The S&P500 was led higher by the technology segment to end the week close to its all-time highs and the VIX index of volatility reached its lowest level since July (chart above). Federal Reserve Chair Powell said that since the second part of last year the economies of Germany, China and other European economies had been slowing as a result of trade tensions and this would weigh on the US economy. However he was optimistic that there was no recession on the cards and that the growth rate for this year would remain at around 2% and would be driven by consumer spending. He also mentioned that the FED would take steps to prolong the business cycle. Data on wage growth remained solid and the unemployment rate remains near multi-decade lows.

 

Industrial production and manufacturing orders for the German economy fell more than expected. There is high hope that a fresh round of stimulus to be announced by the ECB this week will provide some relief to the largest European economy. In the UK, Prime Minister B. Johnson could not gather enough parliamentary support to take his country out of the EU by the end of October. The FTSE100 rallied on the news and the pound also gained against the dollar. A UK proposal to the EU to extend the exit deadline by 3 months to allow for fresh elections now appears a possible scenario.

 

China is implementing a stimulus package of its own by lowering the reserve requirement ratio (RRR) of banks to reduce borrowing costs for the first time since January.

The central bank estimates that this will free USD 126 billion into the economy. This move boosted investor sentiment and the Shanghai Composite index surged by over 3% to attain 21% in the year to date.


 
 
  Value Week YTD

Equity Indices

 

 

 

S&P500

2,978

2.48%

18.81%

S. Africa 40

5,570

1.17%

5.98%

Stoxx50

3,494

2.19%

16.46%

FTSE100

7,241

-0.35%

7.65%

DAX

12,253

2.91%

16.09%

CAC40

5,582

2.15%

18.03%

SMI Index

10,004

1.58%

18.73%

FTSE MIB

21,923

2.47%

19.67%

Shanghai Comp

3,021

3.11%

21.14%

BSE Sensex

37,145

1.59%

2.99%

Nikkei

21,392

3.72%

6.88%

Major currencies

 

 

 

USDZAR

14.69

-2.68%

2.30%

EURUSD

1.10

0.55%

-3.80%

GBPUSD

1.23

2.12%

-3.27%

USDCHF

0.99

0.54%

1.07%

EURCHF

1.09

1.10%

-2.77%

USDJPY

107.35

1.34%

-2.03%

EURGBP

0.89

-1.53%

-0.55%

USDAUD

1.46

-1.41%

2.88%

Dollar Index

98

-0.53%

2.81%

Commodities 

 

 

 

Brent

63.16

8.46%

17.45%

WTI Oil

58.41

8.32%

28.67%

Copper

2.61

3.09%

-1.51%

Aluminum

1,804.75

2.85%

-1.01%

Platinum

944.20

-2.14%

17.78%

Sugar

11.00

-1.70%

-8.56%

Corn

358.12

2.39%

-4.50%

Coffee

98.63

3.19%

-3.16%

Gold

 1,501.50

-3.53%

14.36%

Cotton

59.21

2.33%

-18.07%

Sovereign Yields

 

 

 

US10Y

1.64

11.97%

-39.05%

UK10Y

132.94

-2.41%

7.91%

Germany10Y

-0.58

-18.21%

-333.74%

 

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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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