Date published -2023-09-12

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

Markets:

Last week, US indices experienced losses, with the Dow Jones declining by 1%, the S&P 500 losing 1.5%, and the Nasdaq falling 2.1%. Tech and semiconductor stocks bore the brunt of the losses, while healthcare rebounded after a lacklustre performance in the preceding week. On a positive note, energy stocks performed well, aligning with the surge in oil prices. The move has been so strong that it takes the title of this week's newsletter. We have captured much of the upside move in oil and subscribers can see our updated chart in the full report.

Apple faced a notable setback, down 5% for the last week, primarily due to concerns regarding potential iPhone bans imposed by the Chinese government. Additionally, Kroger saw a significant uptick of 3.1% following the announcement of the sale of 413 stores for $1.9 billion to C&S Wholesale Grocers.

In the South African markets, the majority of indices experienced declines, with the Resources sector taking the hardest hit, dropping by -3.23%.

Bell Equipment reported substantial earnings growth, Sanlam successfully finalized a joint venture with Allianz SE, Santam divested its 10% stake in SAN JV to Allianz, receiving R2.6 billion in cash, Shoprite achieved impressive growth in its Supermarkets RSA business, African Rainbow Minerals reported a 21% drop in headline earnings, and Bidvest announced strong financial performance. Further detail can be found in our full report.

Our feature chart this week highlights the impact that index inclusion can have on a company's share price and long term prospects. It is inspired by one of our trade ideas this week which includes a stock to be included in one of the headline indices we cover. Sometimes, trading ideas and opportunities do not only present themselves on the charts but also in some of the structural elements of the market.

Economic:

South African GDP was the key focus last week as the economy displayed resilience in Q2 2023, expanding by 0.6% on a quarterly basis and 1.6% annualised. South Africa’s current account deficit widened in Q2 2023, reaching ZAR 160.7 billion – 2.3% of GDP. In the US and Germany, factory orders declined. Retail sales in the Euro Area also declined and Euro Area GDP expanded by a mere 0.1% on a quarterly basis. This frames the outlook ahead of key policy meetings this week and next.

Inflation in China increased but China's trade surplus narrowed. Market sentiment remains fixated on whether slowing economic momentum will drive a reversal in monetary policy tightening and whether major economies tip into recession.

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

For the week ahead, in SA we have manufacturing and mining production for July. From Europe we have industrial production as well as a policy rate announcement from the ECB. With crude oil prices above $90, the market will also focus on OPEC’s monthly report as well as US stockpile data.

This week, we maintain 3 speculative long positions in key equity markets. We continue with a range trade in a key commodity and look for a pullback in another where we are considering re-entering a long position. We indicate a speculative long on a key FX pair. We have 6 'No Position' stances across our 10 carousel markets with several range trades over the short term for more active traders. Details in our full report for paying subscribers.

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