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PSG daily investment update 14 May 2019
Date: 14 May 2019 Category: Stock Market |
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In our continued efforts to give our readers a broad number of views, opinions and information, we continue to provide PSG's daily market updates and add our own daily rant at the end.
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Short summary of PSG's market commentary for 14 May 2019
South Africa
The JSE tracked global markets on a downward spiral on Monday as investors expressed concerns over an ailing global economy after the US and China failed to reach a consensus on Friday. Shortly after the closing bell, the All Share had lost over 0.70%.
United States
Most Wall Street indexes declined on Monday after China announced its retaliation plan to impose tariffs on US products, fuelling concerns that the US economy may very well be shoved into recession. At 17h15, the Dow futures had lost over 2%.
Europe
European shares continued on a downward spiral on Monday after recording the biggest weekly decline to date amid crushed hopes that the US and China will resolve their trade spat in the foreseeable future. At 17h20, the pan-European Stoxx 600 lost 1.12%.
Hong Kong
Markets in Hong Kong were closed on Monday for a public holiday.
Japan
The Nikkei traded lower on Monday as most cyclical sectors lost their footing after Beijing vowed to retaliate with trade tariffs on US goods, while a drop in US futures weighed heavily on sentiment. At 17h25, the Nikkei lost 0.79%.
Rand
The rand lost over 1% on Monday afternoon as a deadlock in the trade negotiations between two of the world’s biggest economies crushed investor hopes of a global economic recovery. At 17h30, the rand traded R14.35 against the dollar.
Precious metals
Gold prices slipped on Monday as the infamous trade war that continues to shake markets weighed on the yuan, reducing Chinese demand for the precious metal. At 17h30, Spot gold was up trading at $1 298.75 an ounce.
Oil
Oil prices surged on Monday supported by concerns over supply cuts in the Middle East amid a deadlock in the US-China trade spat. At 17h45, a barrel of Brent crude was trading at $71.91.
The JSE tracked global markets on a downward spiral on Monday as investors expressed concerns over an ailing global economy after the US and China failed to reach a consensus on Friday. Shortly after the closing bell, the All Share had lost over 0.70%.
United States
Most Wall Street indexes declined on Monday after China announced its retaliation plan to impose tariffs on US products, fuelling concerns that the US economy may very well be shoved into recession. At 17h15, the Dow futures had lost over 2%.
Europe
European shares continued on a downward spiral on Monday after recording the biggest weekly decline to date amid crushed hopes that the US and China will resolve their trade spat in the foreseeable future. At 17h20, the pan-European Stoxx 600 lost 1.12%.
Hong Kong
Markets in Hong Kong were closed on Monday for a public holiday.
Japan
The Nikkei traded lower on Monday as most cyclical sectors lost their footing after Beijing vowed to retaliate with trade tariffs on US goods, while a drop in US futures weighed heavily on sentiment. At 17h25, the Nikkei lost 0.79%.
Rand
The rand lost over 1% on Monday afternoon as a deadlock in the trade negotiations between two of the world’s biggest economies crushed investor hopes of a global economic recovery. At 17h30, the rand traded R14.35 against the dollar.
Precious metals
Gold prices slipped on Monday as the infamous trade war that continues to shake markets weighed on the yuan, reducing Chinese demand for the precious metal. At 17h30, Spot gold was up trading at $1 298.75 an ounce.
Oil
Oil prices surged on Monday supported by concerns over supply cuts in the Middle East amid a deadlock in the US-China trade spat. At 17h45, a barrel of Brent crude was trading at $71.91.
Our daily update
Yesterday we covered the world economic outlook (WEO) as published in April 209 by the IMF. Below a short extract from the WEO update posted on our website yesterday.
Global Growth Is Set to Moderate in the Near Term, Then Pick Up Modestly
As a result of these developments, global growth is now projected to slow from 3.6 percent in 2018 to 3.3 percent in 2019, before returning to 3.6 percent in 2020. Growth for 2018 was revised down by 0.1 percentage point relative to the October 2018 World Economic Outlook (WEO), reflecting weakness in the second half of the year, and the forecasts for 2019 and 2020 are now marked down by 0.4 percentage point and 0.1 percentage point, respectively. The current forecast envisages that global growth will level off in the first half of 2019 and firm up after that.
The projected pickup in the second half of 2019 is predicated on an ongoing buildup of policy stimulus in China, recent improvements in global financial market sentiment, the waning of some temporary drags on growth in the euro area, and a gradual stabilization of conditions in stressed emerging market economies, including Argentina and Turkey. Improved momentum for emerging market and developing economies is projected to continue into 2020, primarily reflecting developments in economies currently experiencing macroeconomic distress—a forecast subject to notable
uncertainty. By contrast, activity in advanced economies is projected to continue to slow gradually as the impact of US fiscal stimulus fades and growth tends toward the modest potential for the group. Beyond 2020, global growth is set to plateau at about 3.6 percent over the medium term, sustained by the increase in the relative size of economies, such as those of China and India, which are projected to have robust growth by comparison to slower-growing advanced and emerging market economies (even though Chinese growth will eventually moderate). As noted in previous WEO reports, tepid labor productivity growth and slowing expansion of the labor force amid population aging will drag advanced economy growth lower over the projection horizon.
Growth across emerging market and developing economies is projected to stabilize slightly below 5 percent, though with variations by region and country. The baseline outlook for emerging Asia remains favorable, with China’s growth projected to slow gradually toward sustainable levels and convergence in frontier economies toward higher income levels. For other regions, the outlook is complicated by a combination of structural bottlenecks, slower advanced economy growth and, in some cases, high debt and tighter financial conditions. These factors, alongside subdued commodity prices and civil strife or conflict in some cases, contribute to subdued medium-term prospects for Latin America; the Middle East, North
Africa, and Pakistan region; and parts of sub-Saharan Africa. In particular, convergence prospects are bleak for some 41 emerging market and developing economies, accounting for close to 10 percent of global GDP in purchasing-power-parity terms and with total population close to 1 billion, where per capita incomes are projected to fall further behind those in advanced economies over the next five years.
Read the full article here.
Global Growth Is Set to Moderate in the Near Term, Then Pick Up Modestly
As a result of these developments, global growth is now projected to slow from 3.6 percent in 2018 to 3.3 percent in 2019, before returning to 3.6 percent in 2020. Growth for 2018 was revised down by 0.1 percentage point relative to the October 2018 World Economic Outlook (WEO), reflecting weakness in the second half of the year, and the forecasts for 2019 and 2020 are now marked down by 0.4 percentage point and 0.1 percentage point, respectively. The current forecast envisages that global growth will level off in the first half of 2019 and firm up after that.
The projected pickup in the second half of 2019 is predicated on an ongoing buildup of policy stimulus in China, recent improvements in global financial market sentiment, the waning of some temporary drags on growth in the euro area, and a gradual stabilization of conditions in stressed emerging market economies, including Argentina and Turkey. Improved momentum for emerging market and developing economies is projected to continue into 2020, primarily reflecting developments in economies currently experiencing macroeconomic distress—a forecast subject to notable
uncertainty. By contrast, activity in advanced economies is projected to continue to slow gradually as the impact of US fiscal stimulus fades and growth tends toward the modest potential for the group. Beyond 2020, global growth is set to plateau at about 3.6 percent over the medium term, sustained by the increase in the relative size of economies, such as those of China and India, which are projected to have robust growth by comparison to slower-growing advanced and emerging market economies (even though Chinese growth will eventually moderate). As noted in previous WEO reports, tepid labor productivity growth and slowing expansion of the labor force amid population aging will drag advanced economy growth lower over the projection horizon.
Growth across emerging market and developing economies is projected to stabilize slightly below 5 percent, though with variations by region and country. The baseline outlook for emerging Asia remains favorable, with China’s growth projected to slow gradually toward sustainable levels and convergence in frontier economies toward higher income levels. For other regions, the outlook is complicated by a combination of structural bottlenecks, slower advanced economy growth and, in some cases, high debt and tighter financial conditions. These factors, alongside subdued commodity prices and civil strife or conflict in some cases, contribute to subdued medium-term prospects for Latin America; the Middle East, North
Africa, and Pakistan region; and parts of sub-Saharan Africa. In particular, convergence prospects are bleak for some 41 emerging market and developing economies, accounting for close to 10 percent of global GDP in purchasing-power-parity terms and with total population close to 1 billion, where per capita incomes are projected to fall further behind those in advanced economies over the next five years.
Read the full article here.
Our JSE All Share index daily performance calendar
Visit our JSE Calendar tracker page for a expanded version of the calendar below
The graphic below provides the daily returns of the JSE All Share Index (J203) on a calendar chart. Provides a great overview of the All share index over the course of the month. It will be updated daily with our daily investment update as received from PSG.
So after 4 consecutive months of positive returns on the JSE All Share Index, the month of May kicked of trading on a positive note. And then Donald Trump striked threatening to raise tariffs on billions worth of goods imported from China. China then announced a set of retaliatory tariffs on US goods. So it looks like the trade war is back into full swing. And added to that it seems like tensions between Iran and the US are escalating too, after alleged sabotage of oil container ships by Iran. This should force up oil prices which is one thing world markets don't need as it will fuel inflation and slow global economic growth. For more on daily market movements see our 2019 Calendar tracker.
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article