Stanlib Morning Market Commentary Monday 9th May 2014 Markets continued to gain after Mario Draghi’s changes in Europe, with the US S&P 500 Index up 0.5% on Friday (+1.3% for week), another new high, and the Nasdaq +0.6%, helped by the 217,000 new jobs created in May, which marked the 4th consecutive month of over 200,000 jobs for the first time in 14 years. Also the number of American jobs created since the Great Recession has finally overcome jobs lost in the Great Recession (over 8 million). It has taken some 5 years. European stock markets closed up 0.8% at 6-year highs, while the FTSE 100 Index in London rose by 0.6%. Italian 10-year bond yields declined to 2.76%, the lowest in 20 years and this spurred gains in Italian banks…and our banks. Bond yields in Europe ( which is the cost of borrowing for European governments and by association for companies too) have plummeted this year, pushing bond prices up strongly…and playing a role in keeping global bond yields down longer than expected. Asian markets are generally better, with the Nikkei +0.4% on better than expected GDP growth in the 1st quarter, the Hang Seng +0.7% (Tencent +1.4%) and Australia closed for the Queen’s birthday. Chinese exports were up 7% year-on-year, but imports disappointed -1.6%. The VIX or volatility index in the US (often referred to as the Fear Index) has dropped to its lowest reading in over 7 years of 10.7 (it hit 80 during the crash), perhaps indicating that investors may be getting a bit complacent. Also, US market analyst Elaine Garzarelli notes that financial advisors are perhaps a bit too positive right now, which frequently can lead to a correction in US shares of 4-7%. The US S&P 500 Index is up 5.5% this year. Bond yields are up in the US at 2.61%, but our SA government 13-year bond yield is down another 12 basis points at 8.19%. Foreigners bought a whopping R3.7bn of our bonds on Friday, plus R558m of our equities. Nice! Keep coming boys! The JSE All Share Index was slightly negative on Friday at-0.1% at 49,933, despite Financials gaining 0.7% and banks strong. New 52-week or all-time record highs at some stage during the day were seen in Peregrine, Brait, Barclays Africa, MTN, Investec, Standard Bank, Sappi, Mr Priceless, HCI, Intuprop, Astral, Mondi, Sanlam and Steinhoff. The dollar is a bit stronger this morning at $1.364 to the euro and $1.681 to the pound. The rand is a lot better, along with many emerging market currencies, at 10.58 today to the dollar (from 10.68), 17.78 to the pound (17.93), 14.43to the euro (14.59) and 9.89 versus the Aussie. The rand is moving more with other emerging market currencies than anything else. Also Brazil’s stock market gained 3% on Friday and its currency gained on hopes that President Rousseff would lose the upcoming election. She is very unpopular. Paul Hansen Director: Retail Investing Stanlib Wealth Management stanlib
Posted on: Mon, 09 Jun 2014 08:18:49 +0000
Trending Topics
Recently Viewed Topics
© 2015