Stanlib Morning Market Commentary Tuesday 17th June 2014 Markets have been steady in the US over the past two trading days. They were slightly up yesterday amidst upbeat economic news and on-going company deals. Yesterday the European markets were -0.7% and the FTSE 100 Index was -0.3% on worries about escalating violence in Iraq and the higher oil price ($112/3, a 9-month high). European inflation for May was 0.5% year-on-year, still very low. Asian markets are mixed with the Nikkei +0.3%, Hang Seng -0.5% (Tencent -1%) and Aussie -0.3% (Billiton -0.8%). The JSE All Share Index rose on Friday by 0.3% to 50,763, led by Sasol’s big +4.3% jump to a new record on the higher oil price and optimism about results. As has been widely reported, after the market closed on Friday Standard & Poor rating agency lowered SA’s long-term foreign currency (10% of our government’s total debt) sovereign credit rating to BBB- from BBB because of lacklustre growth and high deficits. A lower rating could see temporary weakness in bonds and the rand today. Our ratings are now apparently similar to Russia, Brazil and India, three of the four BRIC countries. The dollar is flat this morning at $1.356 to the euro (identical to Friday morning) and versus the pound too at $1.697 (also identical). The rand is down from Friday at 10.76 today to the dollar (from 10.70), at a 4-month low versus the strong pound at 18.27, 14.60 to the euro from 14.50 and 10.07 versus the Aussie. The 10-year US government bond yield dropped 1 basis point to 2.59% since Friday, while our R186 13-year bond yield is actually flat versus Friday morning at 8.41%, so clearly the Friday 13th news was already in the price. Foreigners actually bought a tiny amount of our bonds, net, on Friday at R93m but sold R492m of our equities. The total net year-to-date number is +R12.5bn. Tomorrow we get the SA current account deficit, which could be high and the platinum agreement has yet to be signed. The companies want a 5 year agreement but the AMCU union wants 3 years. But they seem very close. Paul Hansen Director: Retail Investing Stanlib Wealth Management stanlib
Posted on: Tue, 17 Jun 2014 08:54:01 +0000