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Weekly Focus - 04 May 2020

Weekly Focus                             04 May 2020

Analysts forecast that the S&P500 will be higher in 12 months 
 

 

The S&P500 fell by 1.66% last week and diverged from European equity indices. The DAX, CAC40, Stoxx50 and FTSE MIB all ended the week higher. Sentiment in the US turned negative after the possibility of the White House engaging in trade or other related sanctions against China. One Republican lawmaker even advocated that the US should default on the trillion dollar treasury securities held by China. Three themes continue to dominate markets for the moment; the medical issue, central bank action and earnings.

 

The approval by the US FDA (Food and Drug Administration) of Remdesivir, a drug produced by Gilead, to fight Covid-19 and the announcement by the Oxford University that they are confident their covid-19 vaccine will successfully clear trials boosted sentiment. Furthermore, the Serum Institute of India (SII) the largest vaccine producer globally announced it has an agreement with Oxford University to produce the vaccines. SII will take a risk and start production as from May to have a considerable stock to distribute when trials end. In addition, the easing of lockdown measures by Germany, France, Italy and Spain boosted sentiment.

 

On the central bank front, the ECB expanded its long term loan program to banks and will offer them at -1% interest from June. An additional program to ease liquidity was announced although Christine Lagarde called for bold fiscal action from EU governments. In the US, the balance sheet of the FED has expanded by $2.3 tn (54%) in the past seven weeks mostly due to $1.44 tn. purchases of treasuries. The overall expansion represents a massive average growth of above $75 billion a day and this has expanded the S&P500 forward PE ratio to 20.3, some 30% above its 10 year average. 

 

The S&P500 earnings decline for this year is projected to be 17.8% (chart above) and revenue is estimated to fall by 2.9%. However analysts remain bullish and estimate that the bottom up target price for the S&P500 in 12 months is 9.6% higher than its closing price of last Friday.

 

 

 

Value

1 Week

YTD

Equity Indices

 

 

 

S&P500

2,831

-1.66%

-12.38%

FTSE JSE All Share

50,337

1.63%

-11.82%

Stoxx50

2,928

1.59%

-21.82%

FTSE100

5,763

-1.43%

-23.59%

DAX

10,862

1.89%

-18.02%

CAC40

4,572

1.49%

-23.52%

SMI Index

9,629

-1.33%

-9.30%

FTSE MIB

17,690

1.79%

-24.74%

Shanghai Comp

2,860

1.58%

-6.23%

BSE Sensex

31,982

0.77%

-22.46%

Nikkei

19,619

-0.83%

-17.07%

Major currencies

 

 

 

USDZAR

18.94

0.82%

35.27%

EURUSD

1.09

0.96%

-2.48%

GBPUSD

1.24

0.04%

-6.23%

USDCHF

0.96

-1.13%

-0.37%

EURCHF

1.05

-0.18%

-2.84%

GBPZAR

23.55

0.85%

26.76%

EURGBP

0.88

0.91%

4.05%

USDAUD

1.57

1.24%

9.96%

Dollar Index

99

-0.63%

3.55%

 Commodities 

 

 

 

Brent

25.97

30.32%

-60.53%

WTI Oil

18.32

44.05%

-69.85%

Copper

2.29

-2.01%

-18.09%

Platinum

768.70

-0.88%

-20.79%

Sugar

10.80

17.26%

-19.52%

Corn

315.88

3.40%

-18.54%

Gold

1,708.80

-0.84%

11.78%

 Sovereign Yields

 

 

 

US10Y

0.61

-8.39%

-68.32%

UK10Y - price

137.61

0.58%

4.74%

Germany10Y

-0.58

29.60%

209.09%

 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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