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Weekly Focus - 24 February 2020

Weekly Focus                           24 February 2020

Strong rebound in Chinese stock market continues
 

 

Major indices in the US reached record highs on Wednesday and retraced after that. Defensive sectors performed better but cyclical sectors dipped slightly. The technology sector was pressured down as news from Apple highlighted supply chain disruptions which will affect revenues and Aptiv, the auto Parts Company also guided down on revenues due to the Covid-19 virus. The yield on the 10 year US treasury fell to its lowest level in a month and the 30 year yield reached a record low. 

 

The Chinese Central Bank issued its quarterly Monetary Policy Report in which it is estimated that the magnitude and duration of the virus on the economy will be limited. The central bank cut interbank lending rates, reduced medium term lending rates to its lowest level since 2017 and also cut the prime lending rate. Equity indices in China reached their highest level in a month with many securities rising by 10%, the highest daily limit on Thursday; the Shanghai Composite index is making a V-Shaped recovery (chart above). IHS Markit’s flash composite purchasing managers’ index (PMI) for the US fell below 50 in February and is a sign of the first contraction in private sector activity since 2013.

 

However the absence of a rebound would be surprising as supply chain disruptions will be temporary. In the Eurozone, there were further signs of a rebound in growth as a faster than expected bounce in business activity helped equity indices remain close to their record highs. The services component of the PMI rose above 50 and pushed the composite index to 51.6 in February. These are encouraging signs for the Eurozone but the situation in the manufacturing sector remains blurred as the improved reading in Manufacturing PMI was not driven by higher demand. On Brexit, negotiations between the EU and the UK on the withdrawal agreement will resume this week. It is likely that this may increase volatility in the pound. 

 

 

Value

1 week

YTD

Equity Indices

 

 

 

S&P500

3,338

-1.25%

3.31%

FTSE JSE All Share

55,202

-5.19%

-3.35%

Stoxx50

3,666

-4.83%

-2.08%

FTSE100

7,173

-3.54%

-4.93%

DAX

13,102

-4.94%

-1.10%

CAC40

5,812

-4.53%

-2.80%

SMI Index

10,755

-3.64%

1.36%

FTSE MIB

23,726

-5.50%

0.99%

Shanghai Comp

3,031

1.60%

-0.62%

BSE Sensex

40,322

-1.78%

-2.25%

Nikkei

23,387

-0.58%

-1.14%

Major currencies

 

 

 

USDZAR

15.14

0.99%

8.16%

EURUSD

1.08

-0.15%

-3.50%

GBPUSD

1.29

-0.85%

-2.74%

USDCHF

0.98

-0.01%

1.31%

EURCHF

1.06

-0.16%

-2.23%

GBPZAR

19.52

0.13%

5.14%

EURGBP

0.84

0.73%

-0.71%

USDAUD

1.52

1.87%

6.54%

Dollar Index

100

0.52%

3.60%

 Commodities 

 

 

 

Brent

55.78

-3.17%

-15.39%

WTI Oil

51.45

-1.32%

-15.64%

Copper

2.58

-1.68%

-7.90%

Platinum

975.10

0.26%

0.39%

Sugar

14.93

-0.86%

11.25%

Corn

376.25

-0.43%

-3.00%

Gold

1,684.85

6.22%

10.68%

 Sovereign Yields

 

 

 

US10Y

1.39

-12.10%

-27.72%

UK10Y - price

135.27

1.36%

2.96%

Germany10Y

-0.50

23.44%

164.71%

 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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