Daily Solutions – 15 February 2018

By Alexander Forbes Investments on Feb 15, 2018 in Daily Solutions

JOHANNESBURG – The JSE closed higher on Wednesday amid mixed global markets as higher-than-expected US consumer inflation caused only a moderate risk-off reaction. The Dow was 0.4% lower at the JSE’s close, but European markets had firmed on a weaker euro. In choppy trade, local market sentiment turned positive towards the close after an initial sell-off following the release of the US inflation data. US consumer prices rose 2.1% year on year in January, unchanged from the previous month, but higher than the expected 1.9%. Core consumer inflation rose 1.8% over the year. The Fed is set to raise interest rates three times this year, but higher inflation might lead to more increases. “If there is one thing investors have learnt from last week’s global selloff, it is that the US still matters most,” said Old Mutual Multi-Managers investment strategist Dave Mohr. He said the sell-off started in the US then spread across the world. “As riveting and frustrating as our local politics are, investors need to keep an eye on what happens in the US.” Locally, the removal of President Jacob Zuma now appears to be a formality after the ANC gave him an ultimatum to resign by midnight or be forced out on Thursday in Parliament. The ANC said earlier it was awaiting a statement from Zuma.

US MARKETS – Stocks rose sharply on Wednesday, notching a four-day winning streak as banks and tech carried major indexes higher. They rose despite a jump in bond yields. The Dow Jones industrial average closed 253.04 points higher at 24,893.49 after falling as much as 150 points. Goldman Sachs contributed the most to the gains, rising 2.8 percent. The 30-stock index also erased all of its 2018 losses and posted its longest winning streak since Jan. 5. The S&P 500 gained 1.3 percent to 2,698.63, with financials and tech each rising more than 1.5 percent. Bank of America, J.P. Morgan Chase, Citigroup and Morgan Stanley all traded higher. The financials sector had its best day since Nov. 28. The index also turned positive for 2018.

EUROPEAN MARKETS – European stocks were near session highs at Wednesday’s close, as investors shrugged off concerns surrounding U.S. inflation data and cheered on positive corporate news. The panEuropean Stoxx 600 finished up 1.07 percent provisionally, recovering from a sharp dip in afternoon trade. Turbulence in the region came after the much-anticipated release of the U.S. inflation data, which came in above expectations. Sectors moved back into the black in late afternoon trade, with almost all industries closing above 1 percent, as U.S. markets posted slight gains around Europe’s close. On the bourses front, the U.K.’s FTSE 100 closed up 0.64 percent, while France’s CAC 40 and Germany’s DAX jumped 1.10 percent and 1.17 percent respectively. In peripheral markets, almost also indexes closed higher, with Italy’s FTSE MIB soaring 1.81 percent. Basic resources also rose over 2 percent, with miners lifted by a sharp uptick in gold, nickel, copper and zinc prices.

ASIAN MARKETS – Asian markets closed mixed and the dollar slid to multi-month lows against the yen on Wednesday. The Nikkei 225 closed lower by 0.43 percent, or 90.51 points, at 21,154.17 after reversing gains seen earlier. The index fell as much as 1.42 percent at one point and touched its lowest levels in four months ahead of the release of U.S. inflation data later in the day. Those moves were accompanied by the dollar falling to 15-month lows against the yen. Across the Korean Strait, the Kospi advanced 1.11 percent to close at 2,421.83, with Samsung Electronics extending gains and climbing 3.07 percent. Greater China markets were in positive territory, although trade was thin ahead of the Lunar New Year holidays. Hong Kong’s Hang Seng Index rose 1.73 percent by 3:00 p.m. HK/SIN, with financials logging a strong performance.


Alexander Forbes Investments

Alexander Forbes Investments

Alexander Forbes Investments was established in 1997. We are a forward-thinking and trusted global investment provider, with roots in Africa. In pursuit of certainty we set out to understand our retail and institutional clients’ circumstances and risk tolerance to set clear goals. Our adaptive investment approach, called Living*Investing allows us to maximise opportunity and minimise risk at every stage of the investment cycle.

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