Date published - 2024-05-21
(This is a very shortened version highlighting excerpts of our full report which is available for our paid subscribers).
US markets enjoyed another strong rally last week with all major indices pushing to new highs. The S&P 500 rose by 1.5%, the Dow Jones by 1.2%, and the Nasdaq by 2.1%. Retail sector earnings were a major focus, highlighting divergent trends, with Walmart and Home Depot in focus.
The yield on the US 10-year bond remains range bound but was marginally lower for the week as investors digested cautious remarks on potential rate cuts despite lower-than-expected inflation data. Gold reached a new record, trading above $2400/oz. Brent crude ended the week higher driven by a decline in U.S. crude inventories.
This week we consider an SA stalwart along with a global med tech play.
Some SA company highlights last week:
Gold Fields (-6.5%), Naspers/Prosus (+3%), Richemont (+5.8%), Nampak (+12.3%), Sanlam (+5.1%), MTN (-7.77%), Vodacom (+3.5%) and WeBuyCars (+13.6%) were in focus .
More detail in the full report.
Feature Slide - Understanding Blow-Off and Exhaustion Price Actions
In financial markets, understanding different price actions is crucial for making informed trading and investment decisions. Two such critical concepts are blow-off and exhaustion price actions. These phenomena often signal significant turning points in market trends, making them essential for traders and investors to recognise.
Economic:
South Africa's unemployment rate increased significantly to 32.9% in Q1 of 2024, marking the highest level in a year and the highest since records began in 2008. We also had the release of mining production data which showed a substantial contraction, shrinking by 5.8% year-on-year in March 2024. Our full report unpacks the detail.
Globally, the main focus was on US inflation data which moderated slightly to 3.4%. The lower trajectory on the inflation print helped spur market sentiment and bolster rate cut expectations. Retail sales and manufacturing data showcased a mixed outlook for the US economy.
In Europe, GDP rebounded and inflation remained somewhat tame. This helped support a dovish view from the ECB. In the UK, unemployment rose while wage growth remained steady. In Asia, Japan's GDP contracted by 0.5%, slightly worse than forecasts. China, in contrast, saw strong numbers in industrial production, retail sales, but pressures remain for fixed investment and real estate.
For the week ahead:
US: Fed Speakers, FOMC minutes
SA: CPI
Global: PMI's, UK Inflation, Japan Inflation
Our Market's and Risk view:
After the last few weeks, it is unsuprising that our risk matrix has moved back into 'GREED' territory. Momentum, Stock price breadth and the put/call ratio are all exhibiting Greed. In contrast to the overall matrix, the put/call ratio and overall momentum have moved back into 'GREED'.
(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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