Daily Solutions – 31 August 2018

By Alexander Forbes Investments on Aug 31, 2018 in Daily Solutions

JOHANNESBURG – After 10 consecutive days of gains, which saw the JSE reach 60,000 points, the market slumped on Thursday as global investors again retreated from risk assets. General retailers and industrials led the losers amid adverse corporate news affecting some blue-chip companies. Renewed dollar strength reflected negative emerging-market sentiment, now affecting Argentina, while the Turkish lira slipped a further 5%. MTN and Standard Bank ended the day sharply lower after the Nigerian central bank claimed $8.1bn back from the mobile operator, and slapped the bank with a fine of $5.2m. The Central Bank of Nigeria alleges that MTN repatriated the money illegally, with the assistance of Standard Bank and other financial institutions. nMTN lost 19.41% to R86.50 and Standard Bank 2.39% to R185. Naspers closed 6.42% lower at R3,350, amid weaker Asian markets, as concern over the ongoing trade war between China and the US remains elevated. Local retailers were hard hit by producer price inflation numbers, coming in at a higher 6.1% in July from 5.9% in June, due, in the main, to higher oil prices. Brent crude was up 0.22% to $77.50 a barrel at the JSE’s close. Higher oil prices and the weaker rand signal the possibility of higher interest rates. Mr Price closed 4.44% lower at R229.12, despite a relatively upbeat trading update. The group’s retail sales and other income grew 7.4% to R7.4bn in the first 18 weeks of its 2019 financial year. Woolworths shed 2.45% to R52.50.  

US MARKETS – Stocks snapped a four-day winning streak Thursday after a report said President Donald Trump would support moving ahead with additional tariffs on Chinese imports as early as next week. Wall Street also looked ahead to a U.S.-Canada trade deal deadline set for Friday. The Dow Jones Industrial Average dropped 137.65 points to 25,986.92 while the S&P 500 fell 0.4 percent to 2,901.13. The Nasdaq Composite declined 0.3 percent to 8,088.36 after reaching a record high. The indexes also closed lower for the first time in five sessions. Bloomberg News reported that Trump told aides he supports moving forward with proposed tariffs on an additional $200 billion in Chinese goods. The report also said, however, that Trump has not made up his mind on the matter. The White House declined to comment on the report. 

EUROPEAN MARKETS – European stocks finished Thursday’s session in the red, as investors monitored corporate earnings and a looming deadline for a U.S.-Canada trade deal. The pan-European Stoxx 600 index ended down 0.32 percent provisionally, with the majority of the region’s sectors in negative territory. Telecoms led the losses, off 1.7 percent, with almost all of the sector’s stocks closing lower. Across the board, European bourses saw red by the close with the U.K.’s FTSE 100 off 0.62 percent, the French CAC 40 down 0.42 percent and the German DAX slipping 0.54 percent. In peripheral markets, the Spanish IBEX and Italy’s FTSE MIB, each posted declines of 1 percent or more. Looking at individual stocks, Swiss asset management giant GAM was the biggest loser on the pan-European benchmark after Credit Suisse halved its price target for the stock.

ASIAN MARKETS – Asia markets were broadly down on Thursday afternoon after trading in positive broadly positive territory earlier in the day, as Australia’s third and fourth largest telecom operators announced plans for a merger. South Korea’s Kospi also ended the trading day largely flat. The index reached an intraday high of 2,320.85 earlier after news that U.S. President Donald Trump had signed proclamations which allow for “targeted relief from steel and aluminum quotas from some countries,” including South Korea. The Nikkei 225 closed mainly flat at 22,869.50. The index had been up by 0.75 percent at the open before rising to a more than three-month high, according to Reuters. 

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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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