Date published - 2024-03-05

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

After a mixed and sluggish start to the week last week, US stocks enjoyed a surge in the latter part of the week to close at further record highs.  Notable movers included Nvidia (up 4.4%), NetApp (+21%), Advanced Micro Devices (+13.3%), New York Community Bancorp (-22%),  Apple (AAPL -1.4%), Beyond Meat (BYND +25%). For the week, the Nasdaq jumped 1.7%, the S&P advanced 0.9%, but the Dow Jones lagged slightly with a 0.1% weekly loss. The cryptocurrency market also experienced a noteworthy rally, with Bitcoin (+21%) nearing its all-time high and achieving its biggest monthly gain since December 2020.

Brent crude rose over 2%, marking the highest level in four months despite higher-than-expected US inventories. Gold also rallied strongly, reaching over $2,080 per ounce, and setting a new all-time high, driven by a weakening dollar and lower Treasury yields.

This week's trade ideas look at a longs at two very different resource companies. 

Feature Slide - Dividends in Trading and Investing

Dividends and share price growth are the two ways in which wealth can be provided to shareholders. There is an interaction between dividends and share price growth. Paying dividends allows companies to share their profits with shareholders, which helps to thank shareholders for their ongoing support via higher returns and to incentivise them to continue holding the shares. This educational slide aims to outline what dividends are and what the key timelines look like.

Some SA company highlights last week:

South African stocks bucked the global trend with losses across all major sectors with large cap stocks hardest hit. There was a significant amount of company news. Stocks that caught our eye.

MTN (-3.3% on forex losses), Sasol (SOL +4.2% enjoying the global energy prices despite weak numbers), Northam Platinum (NPH -3.2%), Impala Platinum (IMP -3.1%), AB InBev (ANH -3.3%), FirstRand (FSR -1.4%), Grindrod Shipping (GSH -8.2%), Hammerson (HMN -6%), Murray & Roberts (MUR +9.6%), Truworths (TRU -1.8%), AECI (AFE +3.3%), Woolworths (WHL -5.6%) and RCL Foods (+9.5%). 

More detail on what drove the moves in the full report.

Economic:

There were several US economic data releases last week which in aggregate spurred expectations for lower rates. This contributed to lower US Treasury yields and overall bullish sentiment on capital markets. In our full report we look at US GDP, personal income and spending, and inflation data. We look at inflation in Europe and Japan with the latter topical given the move in the yen and Nikkei.

In South Africa, private sector credit and money supply were overshadowed by the release of trade data. A deficit of ZAR 9.4 billion in January 2024, compared to a surplus in the previous month contributed to rand bearishness which was counterbalanced by a weaker dollar last week. Exports fell 12.8% as logistical challenges limit shipments. Imports rose 2.5% leading to a wider deficit overall.

For the week ahead:

SA: Q4 GDP with the market expecting a muted rebound amid less intense load shedding during Q4 last year. Full year growth is expected to be below 1%. Also current account data and reserves which will be watched given government's decision to draw down on these.

US: Jobs data and Powell testimony, trade data.

Europe: German trade, Eurozone GDP and ECB meeting with rates expected to remain on hold.

China: Trade data, inflation data and the Chinese People's Congress will be watched for policy direction.

Our Market's and Risk view:

Our risk indicators have remained in 'Extreme Greed' territory for a fifth consecutive week now.

(Corporate clients can contact us for more detail on our overall risk matrix).

Our full report unpacks all of this in more detail as well as their implications for the markets.

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