Stanlib Morning Market Commentary Tuesday 8th July 2014 Most markets have drifted down so far this week. The US S&P 500 Index fell 0.4% from last week’s record high, while the Nasdaq fell 0.7% and smaller shares fell over 1% on fears interest rates may be raised sooner than expected because of the stronger jobs report. However, previous bull markets in the past 30 years have done well even amidst rising interest rates, because the economy and company earnings did well. The official US rate is currently 0% or 0-0.25%. It could probably rise to 3%-4% without damaging shares unduly, if it rose because of a stronger economy and higher inflation, which is normally why it rises. We don’t expect the first rate hike until into 2015. European shares fell 1.2% and the FT fell 0.6%. Likewise the Nikkei is down 0.4%, the Hang Seng 0.1% and Aussie 0.1%. Billiton is -0.3% and Tencent -0.9%. The JSE All Share gave up 0.4% to 51,877 yesterday. It was good to Abil (African Bank) up 17.4% on news it may sell its loss-making business, Ellerine Holdings, as well as on some Sunday press speculation that Old Mutual may be interested in Abil. Abil traded at 30 rand last April and yesterday closed at 7.90. It was at 40 rand two years ago; so a nasty bear market there, within the overall global bull mkt. Good to see the Brent oil price trading at under $110, down 5% from the recent $115.7 high, as two Libyan oil ports, shut for the past year, may resume exports. Also, Iraqi oil production remains unaffected, despite hostilities in the country. The dollar is slightly down this morning at $1.36 to the euro from $1.358, also versus the pound at $1.713. The rand is flat at 10.76 today to the dollar, at 18.42 from 18.44 versus the pound, 14.62 to the euro from 14.60 and 10.10 versus the Aussie from 10.06. The US 10-year yield is 4 basis points lower at 2.61%. The SA 13-year R186 bond yield is higher at 8.43%. Yesterday foreign investors bought R977m of our bonds (+R6.2bn in the past 10 days) and sold R132m of our equities (-R2.5bn in the past 10 days). Year-to-date in 2014 the total for both in +R13.6bn, the highest so far in 2014. Talks resume today to end the metal workers strike. Meanwhile, over in the US, Elon Musk’s company Tesla Motors, the US electric car manufacturer, will announce in its upcoming quarterly results how many of its model S electric cars were shipped to China, for the first time. Rumours have it at 1,300 cars. He has mentioned that by the end of next year they could be selling more cars in China than in the US. US company 2nd quarter reports begin later today with Aluminium manufacturer Alcoa. Paul Hansen Director: Retail Investing Stanlib Wealth Management stanlib
Posted on: Tue, 08 Jul 2014 09:50:21 +0000
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