Date published -2023-10-17

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

The past week on markets brought a mixed bag of performances along with a tense global backdrop. We showcase the opportunities in our market carousel section.

The S&P 500 ended the week up 0.6%, the Dow Jones added 0.8% and the Nasdaq added 0.3%. Upbeat earnings results from major banks like JPMorgan, Wells Fargo, and Citigroup provided some positive momentum, while megacap stocks, including Tesla, Netflix and Nvidia faced pressures. Microsoft's revised $69 billion bid to acquire Activision Blizzard received approval from U.K. regulators, marking a significant step in the tech sector's largest-ever acquisition.

While financials posted gains and started the Q3 earnings season on a positive note, Treasury yields experienced fluctuations throughout the week, with the 30-year yield ending at 4.79%, the 10-year yield closing at 4.62%.

Crude oil prices surged, rising beyond $90 per barrel fueled by the ongoing conflict in the Middle East. In addition to geopolitical factors, the U.S. imposed initial sanctions on the owners of tankers transporting Russian oil that exceeded price caps set by the G7. (See our feature chart for the trade opportunities)

The Q3 US earnings season kicks into high gear this week, with Tesla, Procter & Gamble, Johnson & Johnson, AT&T, Netflix, Bank of America and Taiwan Semiconductor among the big names reporting.

The JSE All Share and the Top 40 (Large Caps) showed gains of 1.94% and 2.06%, respectively.

Some SA company highlights last week (our full report includes detail on the moves and drivers):

Jubilee Metals Group (-20%), Sappi (+7.8%), PSG Financial Services (+4.6% ),Equites Property Fund (-4.7%), Famous Brands (-3.7%).

Our trade ideas this week include a multi-leg trade on a local stock as well as a US based financial stock which can benefit from recent market developments. 

Our feature chart is an update on Brent Crude. We highlight several 'waves' in the price action that have set up notable trading opportunities along each leg, either corrective or impulse waves.

Economic:

The IMF wrapped up their latest quarterly meetings against a challenging global backdrop with war dominating the headlines and overshadowing conventional economic news. The fund lowered growth forecasts for China and the euro zone, highlighting uneven global growth despite a strong U.S. economy.

Global GDP projections remained at 3.0% for 2023 but were reduced to 2.9% for 2024. The risks from the Israel-Palestinian conflict were not incorporated into the outlook as the report was finalised before the conflict escalated. The IMF also advised caution in easing monetary policy due to persistently high inflation and cited more downside than upside risks for 2024.

Our full report includes detail on the September FOMC minutes, US inflation data for September, Chinese CPI, total social financing (TSF) and trade data. We also look at SA mining and manufacturing production. 

For the week ahead:

For the week ahead, geopolitics remain the key risk with a wider regional escalation in the Middle East possible. On the economic calendar there are a number of  key releases.

US: US retail sales and industrial production, as well as speeches from Fed officials ahead of a Fed blackout period

China: Q3 GDP, retail sales and fixed asset investment to name a few.

SA: SARB monetary policy review (updates on overall monetary policy framework and forecasts), SA CPI for September, Retail sales for August.

Global: inflation data from several countries, including the UK and Japan.

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