Date published -2023-09-19

(This is a very shortened version highlighting excerpts of our full report which is available for our paid subscribers)

We have maintained our views over the last week given the massive event risk this week. Our market carousel in our full report for paying subscribers includes updated technicals each week on S&P 500, NASDAQ, Nikkei ,Top 40, FTSE, Hang Seng, Gold, Oil, EURUSD and USDZAR where we provide weekly updates on trading levels, support and resistance. Not a paying member? Sign up here for only R250.pm

Over the past week, global financial markets displayed a mixed performance across various asset classes and sectors. The week's highlights include a marginal gain in the Dow Jones (+0.38%), a flat performance in the S&P 500, and a 0.41% decline in the Nasdaq, primarily due to pressure on tech stocks. In the commodities market, oil prices surged by 4.22%, while platinum gained 3.64%, and gold saw a modest increase of 0.29%. However, the South African Rand weakened against major currencies, with notable declines against the Euro and Pound.

We unpack some key stock performances and company results in our full report. Some of the highlights in SA company news last week included FirstRand, Momentum Metropolitan, Sibanye-Stillwater, City Lodge, Sun International and Transaction Capital. 

Arm Holdings, a new semiconductor stock debuted with a successful IPO last week. However, post IPO sales led to a gain of ‘only’ 8% for the week from a peak of over +25%. This led us to consider unpacking what IPO's are and how they work in this week's feature chart.

An Initial Public Offering (IPO) is the process by which a private company goes public, offering its shares for sale to institutional and individual investors. This presents both opportunities and risks to investors and to companies alike. Often an IPO can be 'hyped' up which presents unique risks and heightens the need for proper due diligence. This week's focus on IPO's has also inspired one of this week's trade ideas which you can check out in our trade ideas section of the report.

Economic:

The global macroeconomic focus last week was on US inflation data as the precursor to the Fed meeting this week. Inflation in the United States accelerated to 3.7% in August 2023, driven by rising oil prices and base effects. Core inflation, which excludes food and energy, moderated to 4.3%. With headline inflation running a little hotter than the market expectations, the narrative has shifted to a hawkish tilt to the commentary around this week’s FOMC decision. Other data from the US last week included retail sales and crude oil inventories. 

In Europe, the ECB raised interest rates for the 10th consecutive time. The 25-basis point hike surprised markets which expected rates to be kept on hold. This takes the policy rate to a 22-year high of 4.5%. In China, we saw a continuation of accommodative policy. China's total social financing (TSF) rose significantly and we also saw the release of Retail sales in China. 

The key macroeconomic focus in South Africa last week was manufacturing and mining data. In July 2023, manufacturing production in South Africa increased by 2.3% year-on-year, marking the fourth consecutive month of growth. Conversely, mining production in South Africa declined by 3.6% year-on-year in July 2023.

Our full report includes key details on the above mentioned data releases and their impact on markets. 

For the week ahead, the focus will be on central banks. Globally these are the US Federal Reserve, Bank of England, and Bank of Japan. While the Fed is not expected to raise rates, it may adopt a slightly more hawkish stance following strong August inflation data.

We also have the SARB interest rate decision with market expectations looking for a hold, extending the pause from the last meeting after 10 consecutive hikes. SA inflation data for August will precede the SARB’s decision and will be watched closely.

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