President Trump dialled down his trade war antagonism by pushing for less tariffs with Europe. This saw investors focus on other data points, which provided support for risk assets like the Rand.
Last week we had a positive BRICs summit, the ECB held interest rates steady, US advance GDP came out at 4.1% from 2.2% previously, and China indicated willingness to ease monetary policy further to support domestic industries.
Global growth remains robust with the IMF forecasting growth of 3.9% in 2018 and 2019. Although this will be skewed towards the US, it is still positive considering all the uncertainty investors face. Some investment professionals are concerned by the flattening of the US Yield curve, which increases the probability of a recession, but this is unlikely with global consumers being in a much better financial position than they have been since 2008.
This week is a busy one with data points coming out for inflation, unemployment, GDP and interest rates for developed markets.
Long term investors should stick with their plan and accumulate stocks that are better value now, buying the dips as they come. Investors who have limited exposure to offshore investments, should use the current Rand strength to increase offshore investments.
The week ahead:
- Local Data: Unemployment rate, Trade Balance (31/07); ABSA Manufacturing PMI, NAAMSA Vehicle Sales (01/08); Electricity Production and Consumption (02/08); Standard Bank PMI (03/08)
- Results Due: APH, GLI, HWN, TAW, TWR (31/07); ACL (01/08); JSE, LBH, MIX (02/08); MND, MNP, MTN, RES (03/08)
- LDT (31/07): ASHINF, ASHMID, ASHT40, NPKP, NPP1, PGR
Last week’s movers and shakers…
Best Performers: AMS 11.8%, IMP 8.2%, TOR 6.9%, SLM 5.9%, DSY 5.2%
Worst Performers: SNH -22.9%, HLM -14%, TSX -8.3%, ITU -7.4%, HMN -6.6%
Other Economic data releases of interest…
- Tuesday: ANZ Business Confidence (NZL); BOJ Policy Rate, Monetary Policy Statement (JP); GDP (CAN); CB Consumer Confidence (USA)
- Wednesday: Unemployment Rate (NZL); Manufacturing PMI (UK); ADP Non-Farm Employment Change, Crude Oil Inventories, Federal Funds Rate (USA)
- Thursday: Trade Balance (AUS), Core Durable Goods (USA); Construction PMI, BOE Inflation Report, Official Bank Rate, BOE Gov Carney Speaks (UK)
- Friday: Unemployment Rate, Average Hourly Earnings (USA); Trade Balance (CAN); Services PMI (UK); Retail Sales (AUS)
Long Term Ideas
- Discovery: Back above its 200-day moving average. Hold
- Coronation: Buy below R60.00 for a move back to R80
- AB InBev: Position closed at R1,350 for an 8% gain.
- ARM: Buy dips below R110.00.
- Dischem: Buy below R28.00.
- Shoprite: Building an uptrend from the R200 long-term support level. Hold.
- Aspen: Accumulate on weakness below R245.
- Sygnia: Support building above R10.00. Add
- Santova: Maintain stop loss at R3.10. Hold.
- Merafe: Accumulate below R1.55.
- Jubilee: Speculative buy below R0.50.
- MTN: Accumulate for long term below R110.00.
- Glencore: Still bullish. Hold
- Wescoal: Long term buy. Add below R1.80
- Naspers: Building Support above R3,300, Hold
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