Daily Solutions – 17 October 2017

By Alexander Forbes Investments on Oct 17, 2017 in Market and Economic Commentary The news

JOHANNESBURG – The JSE all share closed above 58,000 points for the first time on Monday as miners shrugged off the effects of a stronger rand, which remained close to its best level in about three weeks. In another strong performance, Naspers closed 1.66% higher at a record R3,253 a share, as Chinese internet company Tencent, in which it owns about a third, closed firmer in Hong Kong trade. Naspers has gained a staggering 61.5% so far in 2017 and is trading at a historic price:earnings ratio of 126. Global markets have been climbing since last week, when the IMF updated prospects for global economic growth for 2017 to 3.6%. SA, however, was one of the few countries to have its growth forecast lowered. The IMF now expects the local economy to grow just 0.7% in 2017 and 1.1% in 2018. Gains in the mining sector came as the copper price broke through the $7,000 a tonne barrier for the first time since 2014, boosting shares such as BHP. Palladium hit $1,000/oz for the first time since 2001, stretching its year-to-date gains to 47%. SP Angel attributed the rise to increased demand and anticipation of a supply deficit. BHP ended the day up 1.63% at R251.91. Stanlib retail investment director Paul Hansen said it may seem ironic that the all share was at a record high, considering the weak economy, the potential for further ratings downgrades and the political shenanigans taking place. “However, we probably passed the point of maximum pessimism in June, at 51,000 points, when all the bleak news about our country was at its most intense,” he said.

US MARKETS – U.S. stocks hit record highs on Monday as Wall Street looked ahead to the release of Netflix’s quarterly results. The Dow Jones industrial average gained 85.24 points to close at 22,956.96. JPMorgan Chase shares rose 2 percent to lead the 30-stock index. Shares of Apple rose 1.8 percent after analysts at KeyBanc Capital Markets upgraded the stock to overweight from sector weight, noting the company will report better-than-expected earnings in 2018. The S&P 500 finished 0.2 percent higher at 2,557.64, with telecommunications and financials leading advancers. Losses in real estate and health care capped gains on the S&P 500. The Nasdaq composite advanced 0.3 percent to 6,624. The three indexes reached record intraday and closing highs.

EUROPEAN MARKETS – The pan-European Stoxx 600 was neutral with most sectors in negative territory. Spanish stocks were once again under pressure as political uncertainty drags on. Catalan President Carles Puigdemont failed Monday morning to give any clarity on whether he has officially declared independence. He said, however, that he wants to meet with Prime Minister Mariano Rajoy. Spain’s IBEX was down 0.8 percent. Utility stocks were the worst performers, dragged down by tariff cuts. The Portuguese EDP fell about 4.7 percent after the regulator cut rates for 2018-2020. On the other hand, basic resources were the best performing stocks after positive data from China. The country saw producer price growth reaching a six-month high in September. Looking at individual stocks, Eurotunnel rose about 1.8 percent, following an upgrade by Goldman Sachs.

ASIAN MARKETS – Most major Asian indexes closed higher on Monday, following the stronger lead from Wall Street, as investors digested the release of China inflation data. Japan’s Nikkei 225 climbed for a tenth straight day, extending gains once more to touch a fresh 21year high. The index was up 0.47 percent, or 100.38 points, to close at 21,255.56. Ahead, politics will be in focus for Japanese markets as the country gears up for lower house election at the end of the week. Across the Korean Strait, the Kospi closed up 0.26 percent at 2,480.05 as steelmakers and cosmetics retailers notched gains: Posco jumped 5.85 percent, Hyundai Steel closed up 2.39 percent and Amorepacific soared 5.17 percent. Tech stocks were mixed, with SK Hynix falling 2.21 percent, but LG Electronics climbing 0.9 percent.


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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