Date published - 2024-04-30
(This is a very shortened version highlighting excerpts of our full report which is available for our paid subscribers).
Global equity markets rebounded from their worst performance in the year to post the best week since October 2023, largely due to a surge in US technology stocks. The S&P 500 gained +2.7%, the tech-heavy NASDAQ +4.2%, and the Dow Jones Industrial Index lagged +0.7%.
Alphabet (+11.5%), Microsoft (+1.8%), Meta (-7.9%) highlighted the divergences in big tech as investors divergent perceptions about each firms’ progress in profitably executing on AI investments resulted in some large moves. Tesla was a surprise winner (+14.4% ).
More detail in our full report.
Brent crude rose above $89 per barrel, gaining over the week with geopolitical tension, supply tightness and a draw on US inventories as drivers. Gold corrected over the week marking its first drop in six weeks after profit taking and a strong performance from risk assets.
This week we consider an SA financial stock and a global utility.
Some SA company highlights last week:
AGL(+20.5%), BHP (-5.3%) on an unsolicited bid, Capitec (+11.9%) on results, Sasol (-16.8%), Implats (-9.9%), Sibanye (-7.9%), and Quilter (+7.9%) on results.
More detail in the full report.
Feature Slide - Understanding Counter Trend Trading
Our feature educational slide this week looks at Counter Trend Trading. In the ever-evolving landscape of financial markets, traders employ various strategies to navigate the complex terrain of price movements and capitalize on opportunities. One such strategy is counter-trend trading, a method that diverges from the conventional approach of riding the prevailing market trend.
Economic:
Last week in SA we had the SARB’s monetary policy review. We provide some highlights in our full report. We also saw the release of the composite leading business cycle indicator which rose by 1.7% month-on-month, marking its first expansion since October 2023.
In the US, GDP grew by an annualized 1.6% in Q1 2024, marking a slowdown from the previous quarter's 3.4% growth and falling short of the expected 2.5%. Meanwhile, annual PCE inflation rose to 2.7% in March, with core PCE price index also increasing by 2.8% year-on-year, reflecting persistent inflationary pressures.
In Europe, consumer confidence remained stable and in Japan, the Bank of Japan maintained its key short-term interest rate between 0% and 0.1%.
For the week ahead:
US: Fed FOMC, Jobs data (ADP and NFP)
SA: Public holiday, Trade Balance, Money Supply and credit
Global: PMI, Eurozone GDP and inflation
Our Market's and Risk view:
The market correction took a breather last week as markets posted their best returns since Q3 last year. We remain cautious and while our risk indicators remain in 'FEAR' for a 3rd consecutive week, they are on the cusp of moving back into "NEUTRAL". The put/call ratio has moved back to levels last seen a month ago and the VIX has moderated.
(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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