MARKET COMMENTARY by PAUL HANSEN Tuesday 26th August 2014: V pleasant weather in beautiful George! When I was a stockbroker in the US in the 1980âs, a favourite saying was ânever short a quiet marketâ. Well it was very quiet in the US last night in the last week of the summer holidays, but sure enough the market rose 0.5% to a new all-time record high, with the Nasdaq Index up 0.4% at a 14-year high, as deal activity continued and the cost of money, via bond yields, continue to plummet in Europe as bond yields hit new record lows in Germany, Italy, Spain etc. Burger King in the US jumped 20% on talks to buy Tim Hortons, one of Canadaâs bigger coffee and doughnut retailers in a move that would create the worldâs 3rd largest fast-food chain. Burger King also announced plans to move its HQ to Canada where the corporate tax rate is 26.5% versus the 40% in the US! European shares had one of their best days in moons yesterday, up a stellar 2.2% as bond yields fell and as concerns about Putinâs ambitions calmed down. Putin is due to meet Ukraineâs leader Poroshenko today in Belarus. The UKâs FTSE 100 Index was closed. Markets in Asia are taking a breather today, with the Nikkei -0.6%, the Hang Seng -0.2% off a 6-year high yesterday (Tencent -0.7%) and Aussie flat, with Billiton -0.4% as Iron ore prices decline to $89 from $90 yesterday. The JSE ALSI gained 0.5% yesterday in quiet trading to 51,437, slightly up since the end of June. The FNDI gained 0.5% and Resources 0.4%. Sad to see Lonmin announce plans to cut 5,700 jobs to restore profitability, but understandable. MTN is apparently also planning to cut 850 managerial jobs to boost flagging SA profits. Pity, cos our economy needs jobs badly, from the private sector. US bond yields are down 3 basis points at 2.37% since yesterday (prices up), while our bonds are down 2 basis points at 8.20% for the R186 13-year bond, while foreigners finally bought some bonds yesterday to the tune of R856m, while also buying R51m of our equities. The dollar is slightly weaker today at $1.32 versus the euro, also versus the pound at $1.658. The rand is slightly better at 10.70 today to the dollar from 10.71 yesterday ahead of our GDP (economic growth) number at 11.30 this morning (expected up around 0.6% for 2nd quarter), at 17.71 versus the pound from 17.72, 14.13 to the euro from 14.12 and 9.94 versus the Aussie from 9.97.
Posted on: Tue, 26 Aug 2014 07:08:22 +0000
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