Daily Solutions – 19 June 2018

By Alexander Forbes Investments on Jun 19, 2018 in Daily Solutions

JOHANNESBURG – The JSE closed weaker on Monday as risk-off sentiment dominated on concern about a trade war between China and the US. Those fears have capped investors’ appetite for risk, explaining why the US stock market has struggled for momentum, Dow Jones Newswires reported. “For the first four months of the year, all of these threats were there but no one really thought the clouds were going to materialise. Now we’re back to the wall of worry,” said Jim Tierney, chief investment officer of concentrated US growth at AllianceBernstein. Technical glitches at the JSE’s opening and closed Chinese markets had a negative effect on volumes, which were exceptionally low at about R11bn. The daily average is about R24bn. Trade started two hours late due to an unspecified technical problem, the JSE said. The Dow opened 0.9% lower, while Chinese markets were closed for the dragon boat festival. After falling sharply on Friday, Brent crude was up 2% to $74.57 a barrel at the bourse’s close. Oil cartel Opec and nonOpec members will meet in Vienna on Thursday for the start of a three-day summit, where production cuts are on the agenda as the latest US data showed an increase in production. The rand was 2% weaker at the JSE’s close, at R13.6885 to the dollar from R13.4223, supporting miners toward the close. But rand hedges showed little reaction.

US MARKETS – Stocks fell on Monday as a potential trade war between the U.S. and China — the world’s largest economies in the world — left Wall Street rattled. The Dow Jones industrial average dropped 103.01 points to close at 24,987.47, with Intel as the worst-performing stock in the index. The Dow also extended its losing streak to five days. The S&P 500 fell 0.2 percent to 2,773.63, with telecom lagging. The Nasdaq composite meanwhile, pared losses to close flat at 7,747.03 as tech shares rose and Amazon hit an all-time high. Shares of Boeing and Caterpillar both fell 0.9 percent. The two companies are seen as bellwethers for global trade concerns given their large amounts of overseas business. On Friday, President Donald Trump announced that the U.S. would inflict tariffs that would impact up to $50 billion worth of Chinese goods.

EUROPEAN MARKETS – European markets closed lower Monday after President Donald Trump announced new tariffs against China. The pan-European Stoxx 600 ended provisionally down by 0.79 percent on Monday with all sectors except Oil and Gas lower on average. The FTSE 100 stock index closed barely lower for the day. Market sentiment was being dominated by trade tensions between the U.S. and China with new tariffs on the table. President Trump unveiled tariffs on more than 800 Chinese goods that could be worth as much as $50 billion. Beijing swiftly countered by implementing similar measures on nearly 700 different American products. China also threatened duties on U.S. crude imports. In autos news, the boss of Volkswagen’s luxury brand Audi was arrested Monday in relation to the German carmaker’s emissions test cheating scandal.

ASIAN MARKETS – Most Asian markets closed lower on Monday as investors digested the escalation in trade tensions between the U.S. and China after both countries announced tariffs last week. Japan’s Nikkei 225 declined 0.75 percent, or 171.42 points, to close at 22,680.33. Shippers led losses, with the Topix sea transport subindex sliding 3.93 percent. Steelmakers dropped 1.73 percent and oil stocks tumbled 3.71 percent amid an extended drop in oil prices. All but one of the 33 Topix sectors finished the day with losses. South Korean markets recorded steeper losses, with the benchmark Kospi ending the session down 1.16 percent at 2,376.24. The secondary Kosdaq sank 3 percent.

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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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