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Peregrine Treasury Services Weekly Market Wrap 3 May 2019
Date: 3 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 provide readers with Peregrine Treasury Services weekly market wrap below.
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Peregrine Treasury Services Weekly Wrap as at 3 May 2019
Election fever is in the air, and politics creeps its way in to casual conversation around dinner tables and office desks. The campaigning and opponent smearing has run its course, and in the final stretch to the voting booths, the only question that really remains is who will be the people's choice. While South Africans set to cast their ballot, the rest of world will keep a watchful eye on what is said to be the most important election since 1994.
GLOBAL DATA AND POLITICS
While upbeat US data has eased fears of the global growth slowdown, other economies has not followed suit. This week saw a limited data calendar as workers day, also known as labour day was celebrated by numerous countries across the globe. Manufacturing and non-manufacturing PMI released by China on Tuesday saw both readings undershoot expectations, coming in at 50.1 and 54.3 points respectively for April.
Economic data from the EU still paints a dire picture, as industrial and consumer sentiment both remains negative at -4.1 and -7.9, while GDP rose marginally by 1.2% year on year . Unemployment for March remained fairly flat at 7.7%. Friday will see the release of PPI and CPI which are expected to accelerate by 3% and 1.6% year on year respectively.
The Bank Of England kept interest rates on hold on Thursday at 0.75%, while all other data remained flat. Construction PMI for April was recorded as 50.5 points for April, while manufacturing PMI declined marginally to 53.1 Turkey is set to release CPI data on Friday, which is expected to come in at crippling 19.57% year on year for the month of April. Lacklustre performance from the local economy remains status quo. The trade balance surplus increased to 5bn for March, slightly outperforming the expected 4.8bn. Manufacturing PMI accelerated to 47.2 points while new vehicles sales rose 0.7% year on year during April.
US POLITICS
The US economy is still leading the charge on a global scale.Both personal spending and income rose month on month during March, while pending home sales accelerated by 3.8% month on month in March. Manufacturing PMI in April ticked up slightly, rising to 52.6 from 52.4,while initial jobless claims remained flat at 230k. Friday will see the release of 3 additional key data events- the US unemployment rate,non-farm payrolls and average hourly earnings- that will all set the landscape for the dollar performance as we end off the week.
On Wednesday, Jerome Powell-Chairman of the Federal Reserve dashed the hopes of many emerging markets hoping on a cut in the US interest rate as the US seems to be turning the economic ship around, slowly easing out of the global growth slump The long anticipated conclusion of the tariff war between the US and China is yet to reach its peak, with markets keeping a keen eye on both power house economies to get some sense of clarity as to the timeline and implication of a concluded agreement.
US EQUITIES
The shattered hopes of an interest rate cut by the federal reserve caused equities to open slightly lower on Thursday. The Dow Jones Industrial Index dropped by 0.09% while the S&P 500 started the day off softer by 0.05%.
Top gainers during Thursdays session:
COMMODITIES
Following the recent rally in the oil price, the US record high inventories managed to put a dent of just over $1 per barrel in the oil price, much to the relieve of net importers of this liquid gold. The US stockpiles rose to its highest level since September 2017, jumping to 470.6 million barrels. Oil prices has largely been driven by the political turmoil in Venezuela, as well as quality control concerns with regards to Russian supply, and stricter US sanctions imposed on Iran. At the time of this report Brent Oil was trading 3.19% lower at $69.92 per barrel.
Gold came under pressure on the back of the announcement by the Federal Reserve that interest rate cuts remains off the cards for the foreseeable future, reaching a four month low to trade at $1269 per fine ounce, while Silver and Platinum both declined to $14.633, $855.30 respectively. Palladium is also feeling the pinch this week, dropping from $1440 earlier this week to $1341,80 by close of market on Thursday.
On Friday morning, gold, platinum and palladium were trading at levels of around, $1272.45 ,$852.10 and $ 1344.85 per fine ounce respectively.
SOUTH AFRICAN POLITICS
There is not much left to be said about the political environment locally, as election day draws closer. The polls has been more than a little confusing with sampling sizes of 2000 amounting to numerous outcomes from numerous sources, all leaving enormous room for error. When looking at the dynamics realistically one can with certainty conclude that the ANC will likely walk away with yet another 5 years in the bag, however, the outcome of the consolidated votes is likely to resemble that of a nation torn. Will the outcome truly reflect the people's choice, or will it reflect a voter-base with few plausible options in terms of opposition.
Whatever the outcome might be one certainty remains-the task that lies ahead to turn the economy around will no be a simple one. The rand came under pressure following strong data from the US, with local factors remaining a marginal contributor to the currency movements. On Wednesday evening, the rand started treading water following the statement by the Federal Reserve, while another wave of strong US data pushed the rand even weaker during the US trading session on Thursday. The key technical level of R14.50 gave way on Thursday afternoon, now opening the door to yet another leg weaker, setting its sights on the R14.80 mark.
SOUTH AFRICAN EQUITY
While the JSE has proposed changes to the current listing requirements, it's newly established competitor is making headway, obtaining its first retail listing,as Mr Price shares becoming trade-able on A2X as from the beginning of May. Mr price has attributed this secondary listing as an effort to deliver value to shareholders. The listing boosts the number of A2X listings to 19, with a combined market capitalisation of R2.4trn
Mr price formed part of the most traded shares on the local exchanges during the course of Thursday, along with British American Tabacco, Glencore and Miltichoice.
As with every market, for every winner there is a loser, and the same goes for equities, some of the top performers for Thursday included:
THE WEEK AHEAD
With the rand on the back-foot, one can expect the trend to continue well in to next week, with enhanced volatility as we await the outcome of the elections following the 8th of May. We are also likely to see the rand remain exposed to additional local pressure such as the threat of load-shedding and potential coalition treaties,all while remaining vulnerable to the greater global backdrop.
One can expect range of R14.42/14.65 in the short term, with kneejerk movements expected as the votes are tallied and the outcome made public. A sustainable weakening trend above the R14.50 level will see the rand set it's sights on R14.80 as the next target level. On Friday morning the rand would’ve set investors back R14. 53 per Greenback, R16. 24 a euro and R18. 95 a British pound.
GLOBAL DATA AND POLITICS
While upbeat US data has eased fears of the global growth slowdown, other economies has not followed suit. This week saw a limited data calendar as workers day, also known as labour day was celebrated by numerous countries across the globe. Manufacturing and non-manufacturing PMI released by China on Tuesday saw both readings undershoot expectations, coming in at 50.1 and 54.3 points respectively for April.
Economic data from the EU still paints a dire picture, as industrial and consumer sentiment both remains negative at -4.1 and -7.9, while GDP rose marginally by 1.2% year on year . Unemployment for March remained fairly flat at 7.7%. Friday will see the release of PPI and CPI which are expected to accelerate by 3% and 1.6% year on year respectively.
The Bank Of England kept interest rates on hold on Thursday at 0.75%, while all other data remained flat. Construction PMI for April was recorded as 50.5 points for April, while manufacturing PMI declined marginally to 53.1 Turkey is set to release CPI data on Friday, which is expected to come in at crippling 19.57% year on year for the month of April. Lacklustre performance from the local economy remains status quo. The trade balance surplus increased to 5bn for March, slightly outperforming the expected 4.8bn. Manufacturing PMI accelerated to 47.2 points while new vehicles sales rose 0.7% year on year during April.
US POLITICS
The US economy is still leading the charge on a global scale.Both personal spending and income rose month on month during March, while pending home sales accelerated by 3.8% month on month in March. Manufacturing PMI in April ticked up slightly, rising to 52.6 from 52.4,while initial jobless claims remained flat at 230k. Friday will see the release of 3 additional key data events- the US unemployment rate,non-farm payrolls and average hourly earnings- that will all set the landscape for the dollar performance as we end off the week.
On Wednesday, Jerome Powell-Chairman of the Federal Reserve dashed the hopes of many emerging markets hoping on a cut in the US interest rate as the US seems to be turning the economic ship around, slowly easing out of the global growth slump The long anticipated conclusion of the tariff war between the US and China is yet to reach its peak, with markets keeping a keen eye on both power house economies to get some sense of clarity as to the timeline and implication of a concluded agreement.
US EQUITIES
The shattered hopes of an interest rate cut by the federal reserve caused equities to open slightly lower on Thursday. The Dow Jones Industrial Index dropped by 0.09% while the S&P 500 started the day off softer by 0.05%.
Top gainers during Thursdays session:
- AmerisourceBergen +5.57%
- Under Armour + 4.79%
- Equinix +4.55%
- CH Robinson + 3.77%
- Fluor -23.97%
- Xylem - 6.05%
- Discovery A -6.16%
COMMODITIES
Following the recent rally in the oil price, the US record high inventories managed to put a dent of just over $1 per barrel in the oil price, much to the relieve of net importers of this liquid gold. The US stockpiles rose to its highest level since September 2017, jumping to 470.6 million barrels. Oil prices has largely been driven by the political turmoil in Venezuela, as well as quality control concerns with regards to Russian supply, and stricter US sanctions imposed on Iran. At the time of this report Brent Oil was trading 3.19% lower at $69.92 per barrel.
Gold came under pressure on the back of the announcement by the Federal Reserve that interest rate cuts remains off the cards for the foreseeable future, reaching a four month low to trade at $1269 per fine ounce, while Silver and Platinum both declined to $14.633, $855.30 respectively. Palladium is also feeling the pinch this week, dropping from $1440 earlier this week to $1341,80 by close of market on Thursday.
On Friday morning, gold, platinum and palladium were trading at levels of around, $1272.45 ,$852.10 and $ 1344.85 per fine ounce respectively.
SOUTH AFRICAN POLITICS
There is not much left to be said about the political environment locally, as election day draws closer. The polls has been more than a little confusing with sampling sizes of 2000 amounting to numerous outcomes from numerous sources, all leaving enormous room for error. When looking at the dynamics realistically one can with certainty conclude that the ANC will likely walk away with yet another 5 years in the bag, however, the outcome of the consolidated votes is likely to resemble that of a nation torn. Will the outcome truly reflect the people's choice, or will it reflect a voter-base with few plausible options in terms of opposition.
Whatever the outcome might be one certainty remains-the task that lies ahead to turn the economy around will no be a simple one. The rand came under pressure following strong data from the US, with local factors remaining a marginal contributor to the currency movements. On Wednesday evening, the rand started treading water following the statement by the Federal Reserve, while another wave of strong US data pushed the rand even weaker during the US trading session on Thursday. The key technical level of R14.50 gave way on Thursday afternoon, now opening the door to yet another leg weaker, setting its sights on the R14.80 mark.
SOUTH AFRICAN EQUITY
While the JSE has proposed changes to the current listing requirements, it's newly established competitor is making headway, obtaining its first retail listing,as Mr Price shares becoming trade-able on A2X as from the beginning of May. Mr price has attributed this secondary listing as an effort to deliver value to shareholders. The listing boosts the number of A2X listings to 19, with a combined market capitalisation of R2.4trn
Mr price formed part of the most traded shares on the local exchanges during the course of Thursday, along with British American Tabacco, Glencore and Miltichoice.
As with every market, for every winner there is a loser, and the same goes for equities, some of the top performers for Thursday included:
- York Timber Holdings +20.57%
- Kaydav Group surging +20%
- ELB Group +15.33%
- Adcock Ingram Holdings -36.7%
- Aveng -33.33%
- Esor -25%
THE WEEK AHEAD
With the rand on the back-foot, one can expect the trend to continue well in to next week, with enhanced volatility as we await the outcome of the elections following the 8th of May. We are also likely to see the rand remain exposed to additional local pressure such as the threat of load-shedding and potential coalition treaties,all while remaining vulnerable to the greater global backdrop.
One can expect range of R14.42/14.65 in the short term, with kneejerk movements expected as the votes are tallied and the outcome made public. A sustainable weakening trend above the R14.50 level will see the rand set it's sights on R14.80 as the next target level. On Friday morning the rand would’ve set investors back R14. 53 per Greenback, R16. 24 a euro and R18. 95 a British pound.
So we will provide this weekly summary from Peregrine Treasury services, together with our Daily Investment Updates from PSG and we will continue to update our JSE Calendar Tracker Page daily with specific market and economic events readers should take note of.
Yesterday we covered Foord Asset's managements principles for long-term investing growth. A small extract from yesterday's article can be found below.
Valuation — buy at the right price. Superior returns come from buying good companies at reasonable valuations. A company’s valuation can be compared to peers and to the market using the price-to-earnings (PE) ratio. The PE is a simple valuation metric calculated by dividing a share’s price by its EPS. While high quality firms do not typically trade at discounted PEs, it is nevertheless important to not overpay for an investment. An overpriced asset can materially reduce long-term returns. Exit a losing investment quickly. All investors, including professionals, make mistakes. But successful investors usually admit their mistakes early, exit those positions and replace them with even better prospects.
Read the full article here.
Yesterday we covered Foord Asset's managements principles for long-term investing growth. A small extract from yesterday's article can be found below.
Valuation — buy at the right price. Superior returns come from buying good companies at reasonable valuations. A company’s valuation can be compared to peers and to the market using the price-to-earnings (PE) ratio. The PE is a simple valuation metric calculated by dividing a share’s price by its EPS. While high quality firms do not typically trade at discounted PEs, it is nevertheless important to not overpay for an investment. An overpriced asset can materially reduce long-term returns. Exit a losing investment quickly. All investors, including professionals, make mistakes. But successful investors usually admit their mistakes early, exit those positions and replace them with even better prospects.
Read the full article here.