Date published - 2024-06-25
Last week the S&P 500 managed to close a third consecutive week of gains. The S&P 500 crossed the 5,500-point threshold for the first time, ending the week up 0.6%. The Dow also saw a robust performance, rising 1.5%, though the Nasdaq was relatively unchanged as momentum on tech giant stocks eased in the latter part of the week. In our carousel this week, we consider multiple scenarios including an extension of the trend or a possible correction.
Nvidia's stock surged intraweek, briefly making it the most valuable company globally on Thursday before retracing in later trade ending the week 2.3% lower. Declines, particularly in major semiconductor stocks like Broadcom (-1.2%) and Qualcomm (-2.4%) weighed on the headline index, while consumer discretionary stocks like Amazon (+2.86%) helped offset the weaker tone. Scrutiny of social media’s impact on mental health by the US Surgeon General weighed on companies like Meta (-1.9%). EV manufacturer, Fisker filed for Chapter 11 bankruptcy amidst severe financial struggles, reflecting broader challenges in the EV sector.
US bond yields were stable over the week around 4.25%. Market sentiment now leans towards expecting two rate cuts from the Fed this year, with a significant portion betting on a cut by September.
Brent crude enjoyed a strong week, rising to around $85 per barrel, close to a seven-week high. Declining U.S. stockpiles and strong US demand signals helped spur the outlook. The geopolitical risk premium due to escalating tensions in the Middle East remains a factor.
Gold remained stable above $2,300 per ounce, supported by expectations of potential Fed rate cuts. Geopolitical tensions also played a role in bolstering gold's appeal as a safe-haven asset.
This week, we consider an SA retail stock along with a global ETF.
Feature Slide - ETFs as Strategic Investment Opportunities
With one of our trade ideas this week being an ETF, here's how ETFs can be used as a strategic investment opportunity. Exchange-Traded Funds (ETFs) have become increasingly popular among investors for their versatility and strategic advantages over individual stock investments. :
Bonus Strategy Feature Slide - Sharpe Ratios Across Markets
As a bonus feature slide this week, we look at the relative Sharpe Ratios across multiple markets. This is useful in considering relative asset allocations and is used in conjunction with our market carousel.
Some SA company highlights last week:
Harmony (+5.9%), Sasol (+14.7%), Standard Bank (+12.3%), Fortress (+4.3%), Sanlam (+10%), Stor-Age (+4%), Thungela (-9.6%)
More detail in the full report.
Economic:
More detail in our full report.
For the week ahead:
SA: Leading Business Cycle indicator, Money supply, credit, PPI, Consumer confidence, Trade Balance
Global: PCE Inflation, Personal spending, personal income, Bank Stress Tests
Our Market's and Risk view:
Our risk matrix is now in FEAR territory for a second consecutive week. Momentum is still in EXTREME GREED, while stock price breadth and the number of new 52 week highs both moved into EXTREME FEAR highlighting a trend we have spoken about for some time. This is that the headline indices are propped up by fewer (large cap) stocks. The put/call ratio has moved into EXTREME GREED territory. The overall mix lends us to be cautious.
(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.