Markets are preparing for significant weakness this morning following the resignation of President Trump’s economic adviser, Gary Cohn. This signals that import tariffs are likely going ahead and that the US is on the brink of starting a trade war against global counterparts. There was a lack of market direction yesterday as Wall Street swung back and forth between gains and losses to eventually close firmer. Factory orders saw a sharp decline in line with expectations.
South African News
SA markets rallied more than 2% yesterday following surprisingly strong GDP growth in the fourth quarter of 2017. Agriculture was the main component that boosted the figure to 3.1% quarter on quarter growth, far ahead of the 1.8% that markets expected. This makes the case stronger for rating agencies to halt credit downgrades and the rand benefitted by surging back to R/$11.80.
FirstRand [FSR] released interim results that showed income from operations increased by 8% while diluted headliner earnings per share only clawed out 6% growth.
Exxaro Resources [EXX] published a revised trading statement for its full year results and expected headliner earnings to be less than half of the previous year’s numbers. The company’s share price closed firmer yesterday alongside other mining companies.
credit: Graph Provided by Sharenet Advanced Online Charts
The Day Ahead
It looks like some of yesterday’s gains will be given back this morning due to global factors surrounding a trade war. Economic releases that could provide direction today includes local business confidence and ADP employment plus the Fed’s beige book. The beige book is a summary of commentary on current economic conditions by federal reserve district. There are 12 branches of the Federal Reserve and each compile their own economic data which is then summarised in the beige book.
Key Results Out Today
SA Business confidence
US ADP employment change
US Fed beige book
Quote of the day
"Never interrupt your enemy when he’s making a mistake." - Napoleon Bonaparte
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