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Weekly Focus - 08 June 2020

Weekly Focus                      08 June 2020

Financial sector recovery is a pre-requisite for economic rebound
 

 

All major indices rose strongly during the past week; The S&P500 increased by close to an impressive 5% but still trailed European indices. The DAX, CAC40 and FTSE MIB all rose by close to 10% after the ECB increased its pandemic emergency purchase program by EUR 600 billion to reach a total of EUR 1.35 trillion.

 

Furthermore, Germany’s ruling coalition agreed on a EUR 130 billion stimulus package which when added with liquidity facilities and loan guarantees represent a third of its annual economic output. This package will be used for a reduction in value added tax until the end of 2020, and direct payments to households. Other major components of the package include incentives for buyers of electric cars and funds for 5G networks. In the UK, there is news that a fiscal stimulus package will be unveiled next month. The core of the package will focus on the inevitable infrastructure spending. There was not much progress on Brexit negotiations though as both sides are far apart on significant issues. The UK has until the end of the month to request an extension of the transition period which ends at the end of the year.

 

In the US, small capitalisation indices led gainers and energy sector stocks benefitted from news that OPEC would trim oil production. The gains in employment came as a surprise and calmed investors who feared that stress in the retail and restaurant sectors would spill over to other parts of the economy. The civil unrest in the US was more prominently covered in the media and diverted attention away from rising tensions with China. In general though, even if there has been an improvement from a month ago, the broad economic data remains weak and the move higher has been due to the unprecedented injection of liquidity by central banks. In the coming weeks, analysts will scrutinise macroeconomic data for clues that the added liquidity is translating into a rise of aggregate demand. An improvement in the financial sector index (chart above) to pre-crisis levels will be an indication that the stimulus is having a positive impact.

 

 

Value

1 Week

YTD

Equity Indices

 

 

 

S&P500

3,194

4.52%

-1.14%

FTSE JSE All Share

50,526

0.54%

-11.58%

Stoxx50

3,380

10.80%

-9.76%

FTSE100

6,509

5.54%

-13.72%

DAX

12,831

10.74%

-3.15%

CAC40

5,191

9.01%

-13.15%

SMI Index

10,177

3.53%

-4.13%

FTSE MIB

20,359

9.92%

-13.38%

Shanghai Comp

2,938

0.77%

-3.68%

BSE Sensex

34,379

3.28%

-16.62%

Nikkei

23,178

5.06%

-2.02%

Major currencies

 

 

 

USDZAR

16.76

-3.52%

19.70%

EURUSD

1.13

1.47%

0.78%

GBPUSD

1.27

1.56%

-4.31%

USDCHF

0.96

0.18%

-0.56%

EURCHF

1.09

1.64%

0.20%

GBPZAR

21.27

-2.03%

14.45%

EURGBP

0.89

-0.08%

5.38%

USDAUD

1.43

-2.86%

0.33%

Dollar Index

97

-0.98%

0.83%

 Commodities 

 

 

 

Brent

42.73

11.59%

-35.21%

WTI Oil

39.88

12.56%

-34.67%

Copper

2.55

3.38%

-9.26%

Platinum

854.65

-5.03%

-12.03%

Sugar

12.12

10.18%

-9.69%

Corn

334.12

3.29%

-13.89%

Gold

1,697.90

-3.00%

10.60%

 Sovereign Yields

 

 

 

US10Y

0.92

38.17%

-51.95%

UK10Y - price

135.27

-1.84%

2.96%

Germany10Y

-0.29

-29.28%

52.41%

 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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