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Weekly Market Focus - 28 October 2019

Weekly Focus                                                 28 October 2019

US earnings boost investor sentiment

 

 

Investor sentiment remained bullish after earning reports by 40% of companies comprising the S&P500 index. The latter remained close to its all-time highs after a good performance by growth segments including commodities, industrials and technology. Shares of Caterpillar and Boeing rose but at the same time the yield on 10 year treasuries remained above 1.80%. While the blended earnings decline for the quarter is 3.7%, it was not a surprise that companies generating over 50% of their revenue from the US had stagnant earnings growth (-0.8%).

 

On the opposite companies generating over 50% of the revenues outside of the US registered a decline in their growth rate of 9%. Part of this is due to the rise of the dollar index during the period and the ongoing growth differential between economies. Clearly the US remains the place favoured by investors for the time being.

 

On Wednesday, the US FED should lower interest rates by another 0.25% but rising commodity prices will restrain its ability to provide definitive comments on the scale of future cuts. The preliminary GDP growth report for Q3 is due to be released on the same day and should confirm soft investment data even if consumer spending should compensate to some extent.

 

In the Euro Area, PMI data points to a stagnant quarter 3 growth in GDP but there is hope that the services sector has held up well. Low inflation remains an issue with the headline number close to 0.7% following a decline in base effect of commodity prices and the core data is also stagnant at 1%. In China, the Caixin PMI data due on Friday should confirm the recent trend of positive growth which is critical for a rebound in global industrial growth.

 

 

Value

1 week

Year to date

Equity Indices

 

 

 

S&P500

3,023

0.53%

20.57%

S. Africa 40

5,577

-0.55%

6.13%

Stoxx50

3,623

0.64%

20.71%

FTSE100

7,314

2.09%

8.70%

DAX

12,935

1.46%

22.50%

CAC40

5,725

1.34%

21.00%

SMI Index

10,216

2.22%

21.17%

FTSE MIB

22,614

0.62%

23.43%

Shanghai Comp

2,980

1.38%

19.49%

BSE Sensex

39,250

-0.12%

8.82%

Nikkei

22,867

1.41%

14.25%

Major currencies

 

 

 

USDZAR

14.57

-1.25%

1.47%

EURUSD

1.11

-0.48%

-3.27%

GBPUSD

1.28

-1.00%

0.56%

USDCHF

1.00

0.93%

1.38%

EURCHF

1.10

0.44%

-1.95%

USDJPY

108.73

0.10%

-0.78%

EURGBP

0.86

0.52%

-3.80%

USDAUD

1.46

0.58%

3.26%

Dollar Index

98

0.50%

1.88%

Commodities 

 

 

 

Brent

61.51

4.27%

14.28%

WTI Oil

56.42

5.78%

24.18%

Copper

2.68

1.25%

1.28%

Platinum

934.65

4.84%

16.64%

Sugar

12.34

0.57%

2.58%

Corn

385.12

-0.55%

2.70%

Gold

1,507.05

1.27%

14.82%

Sovereign Yields

 

 

 

US10Y

1.84

1.77%

-31.68%

UK10Y

132.29

0.65%

7.36%

Germany10Y

-0.35

1.16%

-241.87%

Deposit rates with selected banks

 

Investec Bank 32 days CCM - USD 1.20%

 

     

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 ha

s 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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