Date published - 2024-04-02

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

Last week was a holiday shortened trading week as well as quarter end. This saw investors cautious amid position squaring and lower activity levels. The first quarter was the strongest since 2019 and saw the S&P 500 gain just above 10% slightly leading the NASDAQ’s 9% gain with the Dow Jones trailing with a gain of 6%.

The week also saw a significant event impacting the U.S. supply chain with the collapse of a key bridge in the US city of Baltimore. This incident poses considerable implications for the economy, especially in terms of shipping traffic and potential delays and costs. In company news, Boeing's (+2% for the week) management shakeup caught our attention.

The US 10-year Treasury yield was range bound around 4.25%, balancing cautious comments on rate cuts from some Fed Governors against economic data. Brent crude rallied further last week, marking the third consecutive month of gains with an OPEC meeting in focus this week. Gold remains in favour on safe haven demand, trading above $2,230 an ounce.

This week we consider a long resource ETF and a niche tech and control instruments stock. 

Our feature slide this week showcases the quarterly performance of the key markets we cover in our weekly Markets Carousel. We also highlight how our overall stance has performed vs. the market performance. In aggregate, the quarter was a good but challenging quarter which required significant focus and vigilance.

Some SA company highlights last week:

South African stocks saw gains across most sectors last week but year to date performances still significantly trail global peers with large caps and financial stocks lagging. Given the holiday shortened week, it was as relatively quiet week in terms of company news. Some highlights:

Old Mutual (-2%) on year end results, PPC (+5%), Barloworld (+3.7%), Spar (+1.4%) and MTN (+9%) on maintaining the dividend despite massive forex and finance losses in Africa.

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

Economic:

Last week was a busy week on the macroeconomic front. US GDP was stronger, while PCE inflation edged up to 2.5%. Personal spending was robust but personal income decelerated. The overall backdrop implies that the economy remains resilient but that underlying pressures are building. UK GDP confirmed technical recession for the first time since the pandemic.

The SARB MPC unanimously decided to keep the repo rate at 8.25%, as policy makers cited upside risks to the inflation outlook. Inflation and growth forecasts were updated.

For the week ahead:

Global: Flash PMI releases for March as a leading indicator, OPEC meeting, IMF World Economic Outlook.

SA: PMI and vehicle sales.

US: Jobs data

Our Market's and Risk view:

We remain cautious and our risk indicators remain in GREED for a fourth week after being in EXTREME GREED for the 5 preceding weeks.

(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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