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Weekly Focus - 27 January 2020

Weekly Focus                                           27 January 2020

Corona virus epidemic clouds positive economic data

 

 

Last week, the S&P500 retraced from its all-time high in spite of positive economic data. In fact, news of the first victim from the corona virus in Seattle affected investor sentiment. Stock in the tourism, airline and gaming sector fell as investors looked for short term safe haven instruments. The price of the US 10-year Treasury note rose and its yield fell to its lowest level in 3 months. The appeal of high dividend paying stocks also favoured the Utilities and Real Estate sectors which rose by 2.40% and 1.01% respectively. The energy sector fell the most to close the week lower by 4.23%. The earnings season progressed with 17% of companies having reported so far. 73% of these have reported earnings above analysts’ estimates and a third of them have exceeded expectations on revenue.

 

On the economic front, new home sales rose to its highest level in nearly two years and manufacturing PMIs for France and Germany showed that the two largest European economies could be picking up steam. The new orders component for Germany increased for the first time in seven months and for the tenth consecutive month in France. In the UK, business activity expanded for the first time in five months but is still weak. It is likely that the Bank of England may lower interest rates in the near term to support the expansion.

 

The coronavirus situation has led to a decline in the share price of luxury good makers LVMH, Kering and Burberry due their exposure to the Chinese market. Although It is too early to estimate the impact to the global economy of the epidemic, it is useful to compare this to the SARS outbreak of 2003 (see chart above) as it is following a similar pattern. Back then, the global impact was muted.

 

 

Value

1 week

YTD

Equity Indices

 

 

 

S&P500

3,295

-1.03%

2.00%

FTSE JSE All Share

57,261

-2.95%

0.31%

Stoxx50

3,779

-0.76%

0.91%

FTSE100

7,586

-1.15%

0.58%

DAX

13,577

0.37%

2.47%

CAC40

6,024

-1.25%

0.77%

SMI Index

10,850

0.07%

2.19%

FTSE MIB

23,969

-0.71%

1.97%

Shanghai Comp

2,977

-3.22%

-2.41%

BSE Sensex

41,613

-0.79%

0.87%

Nikkei

23,827

-0.89%

0.72%

Major currencies

 

 

 

USDZAR

14.39

-0.44%

2.82%

EURUSD

1.10

-0.59%

-1.67%

GBPUSD

1.31

0.48%

-1.42%

USDCHF

0.97

0.31%

0.33%

EURCHF

1.07

-0.27%

-1.34%

GBPZAR

18.82

0.04%

1.30%

EURGBP

0.84

-1.06%

-0.19%

USDAUD

1.47

0.71%

2.89%

Dollar Index

98

0.34%

1.70%

 Commodities 

 

 

 

Brent

59.89

-7.65%

-9.26%

WTI Oil

54.20

-8.55%

-11.23%

Copper

2.68

-5.89%

-4.08%

Platinum

1,010.25

-1.97%

3.95%

Sugar

14.37

-0.55%

7.08%

Corn

386.62

-0.68%

-0.29%

Gold

  1,571.10

0.90%

3.15%

 Sovereign Yields

 

 

 

US10Y

1.69

-7.62%

-12.14%

UK10Y

134.35

0.67%

2.26%

Germany10Y

-0.34

58.41%

81.28%

 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 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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