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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 inputs in at the end.
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Short summary of PSG's market commentary for 15 July 2019
South Africa
The JSE ended flat on Friday, after tracking a rally in global markets, while gains were trimmed by a sell-off in Asia following disappointing interim results. The All Share closed up by 0.01%.
United States
Wall Street’s main indexes traded higher on Friday extending the week’s solid run boosted by hopes of an interest rate cut by the US Federal Reserve (Fed) later this month. At 17h25, the Dow was trading 0.48% in the green.
Europe
European shares were marginally higher on Friday, supported by a stellar performance by financial and mining stocks, however, concerns over the impact of a prolonged US-China trade war trimmed gains. At 18h55, the pan-European STOXX 600 Index was 0.02% in the green.
Hong Kong
Hong Kong markets closed in the green on Friday as investors scrutinized a range of Chinese economic data to evaluate the state of the country’s economy while concerns over a deadlock in the US-Sino trade spat trimmed optimism in the market. At 19h05, the Hang Seng gained 0.19%.
Japan
Japan’s Nikkei strengthened on Friday boosted by a better-than-expected performance by market heavyweight Fast Retailing. At the closing bell, the Nikkei had gained 0.20%.
Rand
The rand surged to a five-month high on Friday supported by hopes of a Fed rate cut, with the market pricing in a 17.50% chance of a 50-basis-point cut later this month. At 17h50, the rand traded at R13.99 against the dollar.
Precious metals
A weaker dollar and concerns over a slowdown in global growth boosted gold prices on Friday. At 18h00, spot gold was trading in the red at $1 408.90 an ounce.
Oil
Oil prices peaked on Friday and recorded a weekly gain as production was disrupted in the Gulf of Mexico due to a tropical storm amid tensions in the Middle East. At 18h15, a barrel of Brent crude was trading at $67.27.
The JSE ended flat on Friday, after tracking a rally in global markets, while gains were trimmed by a sell-off in Asia following disappointing interim results. The All Share closed up by 0.01%.
United States
Wall Street’s main indexes traded higher on Friday extending the week’s solid run boosted by hopes of an interest rate cut by the US Federal Reserve (Fed) later this month. At 17h25, the Dow was trading 0.48% in the green.
Europe
European shares were marginally higher on Friday, supported by a stellar performance by financial and mining stocks, however, concerns over the impact of a prolonged US-China trade war trimmed gains. At 18h55, the pan-European STOXX 600 Index was 0.02% in the green.
Hong Kong
Hong Kong markets closed in the green on Friday as investors scrutinized a range of Chinese economic data to evaluate the state of the country’s economy while concerns over a deadlock in the US-Sino trade spat trimmed optimism in the market. At 19h05, the Hang Seng gained 0.19%.
Japan
Japan’s Nikkei strengthened on Friday boosted by a better-than-expected performance by market heavyweight Fast Retailing. At the closing bell, the Nikkei had gained 0.20%.
Rand
The rand surged to a five-month high on Friday supported by hopes of a Fed rate cut, with the market pricing in a 17.50% chance of a 50-basis-point cut later this month. At 17h50, the rand traded at R13.99 against the dollar.
Precious metals
A weaker dollar and concerns over a slowdown in global growth boosted gold prices on Friday. At 18h00, spot gold was trading in the red at $1 408.90 an ounce.
Oil
Oil prices peaked on Friday and recorded a weekly gain as production was disrupted in the Gulf of Mexico due to a tropical storm amid tensions in the Middle East. At 18h15, a barrel of Brent crude was trading at $67.27.
Our daily update
As is the case every Monday on our daily investment update, we take a look at Peregrine Treasury services summary of South African equities for the previous week. The extract below
SOUTH AFRICAN EQUITY
With the local political landscape having had a relatively calm two weeks, all eyes were, once again, focused on the Fed’s testimony which was delivered on Wednesday afternoon. In essence, the ebb and flow of the US dollar, vs the local rand, has been the major driver of South African listed stocks. Where resources had a great run last week, this week saw the precious metal sector cooling off by just over one percent. Most other sectors were seen climbing little more than 0.50% in the last five trading days - an extremely tricky trail to navigate.
ArcelorMittal (ACL) were seen releasing a gloomy six-month trading update on Wednesday which stated that the company had been hampered by rigidly high costs which lie outside of the company’s control, including the likes of raw materials, electricity, and rail and port costs. The company is also likely to face additional headwinds, as it navigates the formal consultation process, which will assess the feasibility and impact of the 2,000 job losses potentially being considered as part of the firm’s cost-cutting strategy. ACL were seen closing 15.80% down on the day of the release of this news, closing at a market price of R2.93 per share on Wednesday. Thursday morning saw the stock touching lows of around R2.71 per share. ACL opened Friday’s trading day at R2.90 per share.
Woolworths (WHL) finally caught a much-needed break after having spent most of 2019 under the R50.00 a share mark, due to unfavourable news coming out from its David Jones clothing business in Australia earlier in the year. Thursday morning saw WHL releasing a surprisingly positive trading update for the 53 weeks ending 30 June 2019. Key figures that influenced Woolworths’ stronger-than-expected performance:
Here’s some of the bigger movers on the JSE for the 2019 year so far, painting a relatively clear picture that investors are tending to lean toward the, historically-defined, safer haven segment:
Read the full article here
SOUTH AFRICAN EQUITY
With the local political landscape having had a relatively calm two weeks, all eyes were, once again, focused on the Fed’s testimony which was delivered on Wednesday afternoon. In essence, the ebb and flow of the US dollar, vs the local rand, has been the major driver of South African listed stocks. Where resources had a great run last week, this week saw the precious metal sector cooling off by just over one percent. Most other sectors were seen climbing little more than 0.50% in the last five trading days - an extremely tricky trail to navigate.
ArcelorMittal (ACL) were seen releasing a gloomy six-month trading update on Wednesday which stated that the company had been hampered by rigidly high costs which lie outside of the company’s control, including the likes of raw materials, electricity, and rail and port costs. The company is also likely to face additional headwinds, as it navigates the formal consultation process, which will assess the feasibility and impact of the 2,000 job losses potentially being considered as part of the firm’s cost-cutting strategy. ACL were seen closing 15.80% down on the day of the release of this news, closing at a market price of R2.93 per share on Wednesday. Thursday morning saw the stock touching lows of around R2.71 per share. ACL opened Friday’s trading day at R2.90 per share.
Woolworths (WHL) finally caught a much-needed break after having spent most of 2019 under the R50.00 a share mark, due to unfavourable news coming out from its David Jones clothing business in Australia earlier in the year. Thursday morning saw WHL releasing a surprisingly positive trading update for the 53 weeks ending 30 June 2019. Key figures that influenced Woolworths’ stronger-than-expected performance:
- Sales for the year-ending 30 June: up 5.90%
- Food sales growth: up 9.80%, for the 52 weeks (maybe the firm should focus more on this business? Imagine an even higher-end Whole Foods-like division, to the already-loved WHL fresh fruit, veg and meat selection. With the robust brand they’ve created, would a risk in venturing into a brand new pioneering segment (within South Africa) be fruitless? Definitely something to think about)
- General sales prices were up by 1.80% for the year
- Clothing segment, David Jones, continued to add its adverse drag: one percent increase in local (Australian) sales, for the period
Here’s some of the bigger movers on the JSE for the 2019 year so far, painting a relatively clear picture that investors are tending to lean toward the, historically-defined, safer haven segment:
- Impala Platinum: up 102.29%
- Kumba Iron Ore: up 66.57%
- Sibanye Gold: up 66.67%
- Rebosis Property Fund: down 71.75%
- Omnia: down 64.50%
- Brait: down 39.33%
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 the South African stock market is still up substantially for the year, with the only negative months so far being the month of May in which markets pulled back pretty sharply. But the markets rebounded in June with it ending up close to 5% for the month.
The JSE All Share Index is down -1.57% for the first two trading weeks of July 2019. We expect the Rand to weaken from its recent strength as we predict that the South African Reserve Bank (SARB) monetary policy committee (MPC) will cut South Africans interest rates later this month.
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
The JSE All Share Index is down -1.57% for the first two trading weeks of July 2019. We expect the Rand to weaken from its recent strength as we predict that the South African Reserve Bank (SARB) monetary policy committee (MPC) will cut South Africans interest rates later this month.
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