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Weekly Focus - 27 April 2020

Weekly Focus                       27 April 2020

Oil price goes negative and then rebounds
 

 

Major indices remained range-bound during last week. Within the S&P500, the utilities, staples and financial sectors lagged. Energy stocks rallied on Thursday and outperformed. However futures contracts for the West Texas Intermediate expiring last week fell to minus USD 37 on Monday meaning traders were getting paid to buy the commodity (chart above). Prices recovered and are not indicating a systemic risk for the sector. The Russell2000 which is indicative of the breadth of the market ended higher for the week.

 

Rating downgrades are spreading and analysts revised their estimates for both Alphabet and Apple lower last week. High yield bonds remained volatile in the US and in Europe. The energy sector has a large weight in high yield indices and the number of bankruptcies has reached its highest level in a decade. On the macroeconomic front, given the current context of the lockdowns, the record-low preliminary estimates of Manufacturing PMIs were unsurprising.

 

But there was also positive news last week as the US voted an additional fiscal package of USD 484 bn to increase funding for small businesses. In addition the ECB relaxed its asset purchases rules to enable it to buy non-investment grade bonds until September 2021. This decision was hastily taken by the governing council ahead of its planned meeting of this week as there are reports that S&P might cut Italy’s credit rating. On the fiscal side, European Union leaders approved a EUR 480 bn. emergency rescue package and the need for a recovery fund to offset the effects of the pandemic. The crucial details about funding are yet to be finalised but Germany’s chancellor declared that her country was willing to make a significant effort to support the recovery.

 

In Japan, there are reports that the central bank will remove caps on its asset purchases. This will enable it to double the size of its corporate bonds and commercial paper.

 

 

Value

1 Week

YTD

Equity Indices

 

 

 

S&P500

2,837

0.48%

-12.20%

FTSE JSE All Share

49,527

1.39%

-13.24%

Stoxx50

2,868

-1.36%

-23.37%

FTSE100

5,832

0.35%

-22.67%

DAX

10,588

-0.81%

-20.07%

CAC40

4,475

-1.19%

-25.15%

SMI Index

9,734

-0.49%

-8.28%

FTSE MIB

17,270

1.20%

-26.53%

Shanghai Comp

2,815

-1.30%

-7.69%

BSE Sensex

31,743

0.30%

-23.05%

Nikkei

19,783

0.58%

-16.37%

Major currencies

 

 

 

USDZAR

18.87

0.12%

34.84%

EURUSD

1.09

-0.13%

-3.24%

GBPUSD

1.24

-0.05%

-6.26%

USDCHF

0.97

0.51%

0.50%

EURCHF

1.06

0.37%

-2.76%

GBPZAR

23.47

0.08%

26.34%

EURGBP

0.87

-0.09%

3.28%

USDAUD

1.55

-1.95%

8.64%

Dollar Index

100

-0.11%

4.05%

 Commodities 

 

 

 

Brent

23.72

-6.96%

-63.95%

WTI Oil

14.09

-137.52%

-76.88%

Copper

2.35

2.08%

-15.77%

Platinum

780.25

-0.93%

-19.61%

Sugar

9.73

-3.28%

-27.50%

Corn

320.12

1.87%

-17.44%

Gold

1,734.70

1.40%

13.46%

 Sovereign Yields

 

 

 

US10Y

0.62

1.09%

-67.54%

UK10Y - price

136.89

0.24%

4.19%

Germany10Y

-0.47

3.29%

151.87%

 Deposit rates with selected banks

 

The MCB Ltd, 6M 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@pwm-wealth.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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