Date published -2023-10-03
(This is a very shortened version highlighting excerpts of our full report which is available for our paid subscribers).
Financial markets had a challenging week and month. The S&P 500 fell nearly 5% in September, marking its worst monthly performance since December. It also wrapped up the month with a fourth consecutive week of losses, ending Q3 on a low note. A hawkish Fed and risks of a now thankfully averted government shutdown weighed on sentiment. In commodities, gold and platinum continued to struggle, while oil prices remained high due to tight supply and demand. The market will watch an OPEC meeting mid-week this week closely.
Notable stock movements in the US last week included Carnival's 4.9% decline due to a disappointing earnings outlook, while Nvidia (+4.5%), and Nike (+5%) posted gains. Some SA company highlights last week included Sasol, Spar, Barloworld, Capitec, Investec, and Old Mutual.
This week, our report features 2 new trade ideas - both premised on mean reversion. Mean reversion is a valuable concept for traders and investors looking to capitalise on price deviations from historical averages. While it can be a powerful tool, it's essential to combine mean reversion with other analysis techniques and to understand its limitations. Our educational slide explains mean reversion and how it can be practically applied.
Economic:
The US government avoided a shutdown with a last-minute deal but market sentiment remained weak at the start of this week. In economic news, the US inflation data last week saw a 3.5% annual increase in the personal consumption expenditure price index (FED’s preferred inflation measure) This contributed to a hawkish market sentiment. US GDP showed 2.1% growth in Q2 with some key underlying drivers. Home prices rose in July due to limited supply, but activity remains slow due to high mortgage rates.
In South Africa, private sector credit expanded at a slower pace, while producer price inflation increased. The trade surplus exceeded forecasts, benefiting the rand.
There's alot of detail underlying the comment 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.