Date published - 2024-04-23
(This is a very shortened version highlighting excerpts of our full report which is available for our paid subscribers).
The S&P 500 closed out a challenging week with its worst performance in over a year, falling 3.8% and slipping below the 5,000-point level for the first time since late February. This downturn was primarily driven by stronger-than-expected economic data and hawkish comments from the Federal Reserve, leading to reduced expectations for upcoming interest rate cuts.
The tech sector was particularly hit hard, with disappointing quarterly reports from semiconductor giants ASML and Taiwan Semiconductor Manufacturing significantly impacting the market. Market giant, Nvidia fell 14% and other tech heavyweights lagged : Microsoft (-5.4%), Apple (-6.5%), Amazon (-6.2%), and Meta (-6%). Netflix (-11%), Tesla (-14%) and United Health (+14%) were also worth watching.
Oil markets experienced a turnaround with Brent crude falling for the week. The market had been tensed over potential responses to earlier escalation, fresh US sanctions against Iran and possible EU actions. Iran minimized the impact of Israel's drone attack on its territory, indicating no immediate plans for retaliation, calming sentiment. Gold prices remained stable around $2,400 per ounce, driven by safe haven demand amid continued global tensions.
Some SA company highlights last week:
Mondi (+9.4%), Old Mutual (-5.5%) considering a bank, Motus (-7.4%) on a new CEO, and Purple (+20%) on results.
More detail in the full report.
Economic:
The IMF released its World Economic Outlook at its spring meetings and we provide some colour in the full report.
There was a slew of Chinese data releases last week, notably GDP and sectoral reports. In aggregate these presented a mixed and weakening outlook. Detail in our full report.
In the US, we had retail sales which showed a stronger-than-expected increase, rising by 0.7% month-over-month, beating forecasts. Consumer spending continues to be strong rising 4% year-on-year. We also saw manufacturing production data. The stronger data in aggregate has pushed back rate cut expectations.
In South Africa, CPI decreased to 5.3% from 5.6% in February, closer to but still above the midpoint of the South African Reserve Bank's target range of 3% to 6%. A sectoral breakdown (in our full report) shows some interesting trends. Core inflation showed a marginal decline to 4.9% in March.
For the week ahead:
SA: PPI, SARB Leading indicator and monetary policy review
US: Sentiment indicators, Personal spending and income, PCE Price Index
Global: Flash PMI, Bank of Japan policy meeting
Our Market's and Risk view:
The market correction appears underway. We have long flagged this risk and our risk indicators are now in 'FEAR' for a 2nd consecutive week. Momentum, stock breadth and the put/call ratio are all drivers with the latter now in 'Extreme Fear' territory. Earnings season has kicked off but thus far has offered little relief.
(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.
This note is just a 'menu'. There's alot of detail underlying the comments above. Our paying subscribers can get under the hood to see what's driving the economy and the markets. Join us.
If you are not a subscriber, you are missing out on the key details, an overview of the week ahead and quality insights with actionable trade ideas weekly. Click below to sign up!
The full report is available to our Monthly and Annual Members. To read the full report, please login or join us.