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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 6 June 2019
South Africa
Despite the rand tumbling on Wednesday amid confusion around the South African Reserve Bank's (SARB) role, the local market still ended the day in the green after being lifted by positive global sentiment. At the end of trade, the All Share rose 1.05%.
United States
US markets opened higher on Wednesday thanks to positive (yet low) private jobs data and as US Federal Reserve Chairman, Jerome Powell announced that interest rate cuts are likely. Shortly after the JSE closed, the Dow Jones was 0.47% up.
Europe
European shares continued climbing on Wednesday even though tensions rose between the European Commission and Italy concerning Italy’s debt levels. The STOXX 600 closed 0.38% higher.
Hong Kong
On Wednesday, Asian markets made up some of the week’s losses on the back of comments by Powell that US interest rates could be lowered this year. The Hang Seng was 0.59% in the green.
Japan
The Nikkei reached its highest point in over two months on Wednesday after Powell’s comments lifted cyclical shares. At the end of trade, the Nikkei was up 1.80%.
Rand
The local currency fell on Wednesday as it was weighed down by contradicting messages from government about SARB’s role regarding unemployment. At 18h20, the rand traded at R14.88 against the dollar.
Precious metals
Bullion prices soared on Wednesday, boosted by investors flocking to safe-haven investments in fear of the effect the trade war might have on markets. At 18h20, an ounce of spot gold cost $1 329.76.
Oil
Oil prices plummeted on Wednesday as US stockpiles rose unexpectedly, pulling the West Texas Intermediate (WTI) crude futures down 4%. At 18h20, a barrel of Brent crude traded at $60.89.
Despite the rand tumbling on Wednesday amid confusion around the South African Reserve Bank's (SARB) role, the local market still ended the day in the green after being lifted by positive global sentiment. At the end of trade, the All Share rose 1.05%.
United States
US markets opened higher on Wednesday thanks to positive (yet low) private jobs data and as US Federal Reserve Chairman, Jerome Powell announced that interest rate cuts are likely. Shortly after the JSE closed, the Dow Jones was 0.47% up.
Europe
European shares continued climbing on Wednesday even though tensions rose between the European Commission and Italy concerning Italy’s debt levels. The STOXX 600 closed 0.38% higher.
Hong Kong
On Wednesday, Asian markets made up some of the week’s losses on the back of comments by Powell that US interest rates could be lowered this year. The Hang Seng was 0.59% in the green.
Japan
The Nikkei reached its highest point in over two months on Wednesday after Powell’s comments lifted cyclical shares. At the end of trade, the Nikkei was up 1.80%.
Rand
The local currency fell on Wednesday as it was weighed down by contradicting messages from government about SARB’s role regarding unemployment. At 18h20, the rand traded at R14.88 against the dollar.
Precious metals
Bullion prices soared on Wednesday, boosted by investors flocking to safe-haven investments in fear of the effect the trade war might have on markets. At 18h20, an ounce of spot gold cost $1 329.76.
Oil
Oil prices plummeted on Wednesday as US stockpiles rose unexpectedly, pulling the West Texas Intermediate (WTI) crude futures down 4%. At 18h20, a barrel of Brent crude traded at $60.89.
Our daily update
After the very poor GDP numbers released on Tuesday, we revisited our estimate of Taylor's rule which is a formula to estimate where a country's interest rates should be at. And with all the news swirling around the South African Reserve Bank and potential changes to their mandate to include employment and growth, we ask if the Reserve Bank is actually fulfilling its mandate or does it have a blind fixation on inflation targeting only? The results from Taylor's Rule is clear. Based on it South African interest rates are at least 200 basis points to high. See the image below for the latest estimate of Taylor's rule.
Read the full article here
Read the full article here
South Africa's REPO rate compared to Taylor's Rule estimate of where interest rates should be at
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 four very positive months on the markets the month of May bucked the trend and saw half the gains made during the first four months of the year on the JSE wiped out in one month. So what will the month of June 2019 hold for the markets? With trade war in full swing, Chinese manufacturing declining, Brexit worries continuing all we know is it is going to be a bumpy ride.
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
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