The US dollar was slightly weaker yesterday, allowing emerging market currencies to establish a foothold for a recovery following large selling pressure over recent weeks. Wall Street closed higher, led by financial institutions. Corporate earnings season is likely to grab market attention this week in the absence of fresh trade war related news. UK markets closed firmer yesterday, helped by a weaker pound. The currency depreciated after David Davis and Boris Johnson resigned from parliament, increasing the odds of current Prime Minister, Theresa May, facing a leadership challenge. Oil prices are rising on the possibility of a strike from oil workers in Norway and further helped by weakness in the dollar.
South African News
SA markets surged 1.7% yesterday, catching up to global markets after losing out on Friday. Banks led the rally on a day that saw gains across most sectors. Emerging markets came back into favour and that benefitted SA markets. Local bonds also rallied alongside the rand, which is currently trading at R/$13.37. While the market is mainly driven by global factors at the moment, there is a degree of local risk specific to Eskom. The utility has not yet finalised a wage agreement with its 7% increase for this year rejected by the union. If a deal is not concluded today, we may see strike action from Eskom workers.
Tencent has announced plans to IPO its online music business with a US public listing. The market reaction was positive, but the exuberance faded this morning as the share price gave back gains. Naspers [NPN] with its large stake in Tencent has copied the share price movements of Tencent.
Credit: Graph Provided by Sharenet Advanced Online Charts
The Day Ahead
US earnings season is likely to grab market attention with a lack of new information about trade tariffs, although the latter remains a risk. There is a string of economic releases from the UK today.
Key Results Out Today
SA Business confidence
UK Industrial production
UK Manufacturing production
UK Trade balance
Quote of the day
"A man who dares to waste one hour of time has not discovered the value of life." - Charles Darwin
Quantitative Investment Analyst
Ian Stiglingh is a full time quantitative analyst, responsible for research of equities across all industries. Ian completed his degree in Mathematical Science in 2013 and his Honours degree in Financial Risk Management in 2014, both at the University of Stellenbosch. During his studies, Ian worked as an intern at Old Mutual Actuaries & Consultants as well as J.P. Morgan in Johannesburg, and is currently a CFA candidate