US markets rallied higher with technology sector stocks recovering from weak performance earlier in the week. Market sentiment improved after China indicated openness to a new round of trade talks with the US. Data published yesterday showed US inflation print at 2.7%, below expectations and down from the previous month value of 2.9%. Turkey raised interest rates by 6.25% despite calls from President Erdogan to lower interest rates. The rate hike boosted the Lira and other emerging market currencies benefitted. Oil prices declined by 2% after a report showed a ramp up in OPEC production, which sees global supply increasing despite Iranian oil being take off the market. The ECB and BoE both kept rates on hold yesterday. The ECB maintained its stance on reducing asset purchases and slightly decreased its economic growth forecast for 2018 and 2019. Chinese industrial production and retail sales published this morning was a beat on estimates, but fixed asset investment continued its downward path.
South African News
SA markets eventually ended firmer yesterday after a volatile trading day. Aspen was one of the talking points, hitting -25% in intraday trading and recouping some of those losses in the session. Banks were positive and with Naspers, were the main contributors to yesterday’s gain. The rand surged to R/$14.70 and was in line with strong performance from local bonds, which also firmed. Mining production was published for July and it was disappointing. Year on year, mining production decreased by 5.2% and down 8.6% from June. This is a very negative start to third quarter GDP and there is a good chance that we could remain in a recession at the end of Q3.
Impala Platinum [IMP] rallied 5.4% yesterday and is another 5% higher this morning after yesterday’s results release. It’s 2018 losses amounted to R10.8 billion, but the company looks to be on the right track. There has also been a divergence between share price performance and underlying platinum price performance, suggesting a recovery in the share price.
Credit: Graph Provided by Sharenet Advanced Online Charts
The Day Ahead
There is not a lot of activity today, the only data release of note being US retail sales. Trade talks between the US and China remains an underlying theme and there is hurricane Florence due to hit the East Coast of the US today, which could result in massive damages.
Key Results Out Today
EU Trade balance
US Retail sales
Quote of the day
“Follow effective actions with quiet reflection. From the quiet reflection will come even more effective action.” - Peter Drucker
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