Daily Solutions – 16 February 2018

By Alexander Forbes Investments on Feb 16, 2018 in Daily Solutions

JOHANNESBURG – The JSE surged as much 4% on Thursday, in its biggest intra-day rally in more than three years after Jacob Zuma bowed to pressure to step down as head of state. Four of SA’s banks — FirstRand, Standard Bank, Barclays Africa and Nedbank — added a combined R62bn in market value, with all of them reaching record highs. The rally was broad based, from resources to industrial stocks. Even big rand-hedge stocks gained despite a stronger currency. The rand powered to a three-year high to the dollar, providing a boon to locally focused companies, including retailers. The stronger currency brightens the outlook on inflation, which could open a window of opportunity for the Reserve Bank to cut interest rates once key event risks on the horizon have passed. These include the budget, which Finance Minister Malusi Gigaba is supposed to table in Parliament next week. Ratings agency Moody’s is set to conduct a ratings review on SA shortly thereafter. “The good news in SA is now official and, as expected, markets are reacting very positively with foreigners strong net buyers of shares,” said Gerhard Lampen, head of online trading at Sanlam Private Wealth. “There is, however, the small matter of the budget. I think the budget is going to pop the euphoria bubble a bit.

US MARKETS – U.S. stocks rose sharply in choppy trading Thursday as the major indexes extended their current winning streak to five days. The move higher took place despite interest rates reaching multiyear highs. The Dow Jones industrial average closed 306.88 points higher at 25,200.37, with Boeing as the biggest contributor of gains. The 30-stock index traded down 84 points at its session low. The S&P 500 gained 1.2 percent to finish at 2,731.20, with utilities and tech as the best-performing sectors. The broad index was also on pace for its best weekly gain since 2013. The Nasdaq composite rose 1.6 percent to 7,256.43 after falling as much as 0.2 percent. Gains in Amazon, Netflix and Alphabet helped lift the tech-heavy index higher. The Nasdaq was also on track for its best week since 2011. Both the Dow and S&P 500 also broke above their 50-day moving averages, two key technical levels.

EUROPEAN MARKETS – The pan-European STOXX 600 ended trade up 0.53 percent provisionally, off session highs, while sectors closed mostly higher. The recovery rally seen in Europe held Thursday, despite volatility, on the back of sharp losses last week. The FTSE 100 rose 0.29 percent by the close, while France’s CAC 40 sped ahead, up 1.11 percent. Germany’s DAX, however, finished roughly flat, up 0.06 percent. On the other end, shares of Britain’s Indivior tanked 7.4 percent, after releasing full-year results. The group, which makes drugs to treat opioid addiction, said legal costs had increased by $185 million in the final three months of 2017. Standard Life Aberdeen saw shares tumble 7.5 percent after news emerged that it had been given notice on a £109 billion ($153 billion) asset management deal by Scottish Widows and Lloyds Banking Group’s Wealth businesses.

ASIAN MARKETS – Asian stocks closed higher on Thursday, taking cues from the rally on Wall Street, while the dollar slipped. The Nikkei 225 rose 1.47 percent, or 310.81 points, to close at 21,464.98. Most sectors were in positive territory despite the firmer yen, with technology and financials recording substantial gains. Sony rose 1.87 percent and Mitsubishi UFJ Financial Group was higher by 1.82 percent by the end of the day. The manufacturing sector also closed higher, with Fanuc Manufacturing and Komatsu climbing 2.1 percent and 3.95 percent, respectively. The benchmark had come under pressure in the last session after the dollar fell to 15-month lows against the yen during Asian trading hours on Wednesday.

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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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