Trump’s Trade Truce lines up Santa Claus Rally

Trump’s Trade Truce lines up Santa Claus Rally

President Trump sent global markets roaring higher after he and President Jinping agreed to de-escalate the tit-for-tat tariffs. It’s only for the next three months, but signals Trump is realising the potential damage he is causing to the US economy.  

This is good news, when you consider Fed Reserve Chairman Powell, stated the US interest rates are near neutral, with limited rate hikes in the foreseeable future. This caused a softer US Dollar and risk on sentiment to start emerging. 

This couldn’t have come at a better time for despondent investors who have suffered from a lacklustre market etching lower each day. A Santa Claus rally didn’t seem possible just a week ago. December is typically a strong month for shares and historical data on the Dow Jones Industrial Index highlights this. Since 1950, December has been a positive month 74% of the time, and the average gain has been 1.55%.  

Investors should be filling their stockings with large cap stocks that fell significantly last month ahead of the year-end rally. BTI was down 24.8% in November followed by CFR -17.4%, GLN -15.2% and AGL -12.2%. 


The week ahead: 

  • Local Data:  GDP (04/12), Labour Market Dynamics in South Africa, PPI, International Reserves and Foreign Currency Liquidity (06/12); SARB Statements of Assets and Liabilities (07/12) 
  • Results Due AME, NPK, OMN, VVO, VKE (27/11); AWA, CKS (28/11); EXG, KAL, LON, QFH (29/11); ANA, ADW, CIL, EEL, ETO, NFP, HUG, NPN, NCS, SYG, THA (30/11) 
  • Special Dividend (04/12): TOR 


Other Economic data releases of interest… 

  • Tuesday: RBA Rate Statement (AUS); BOE Gov Carney Speaks (UK) 
  • Wednesday: ECB President Draghi Speaks (EU); GDP (AUS); Fed Chair Powell Testifies, ISM Non-Manufacturing PMI (USA); BOC Rate Statement, Overnight Rate (CAN) 
  • Thursday: Retail Sales (AUS); Trade Balance, BOC Gov Poloz Speaks (EU) 
  • Friday: Unemployment Rate (CAN); Fed Chair Powell Speaks, Average Hourly Earnings, Unemployment Rate (USA) 


Short Term Ideas 

  • Goldfields: 15.45% open gain, Target remains R45.25, stop loss remains a daily close below R38.25 


Long Term Ideas 

  • Sasol: Buy below R430.00. Target R550. 
  • AB InBev: Buy below R1,100 with a target of R1,500 
  • Richemont: Buy dips below R95. Target R130.00. 
  • Dischem: Up 15.86%, A break above R33 eyes target of R37.05. Insert Stop loss at R30.75 
  • Remgro: A break above R210 is needed to open up R230. Buy below R205.00 
  • Coronation: Buy dips below R50.00 for a move back to R80 
  • Shoprite: A break above R200 is on the cards. Hold. 
  • Aspen: Bottoming out. Add below R165.00, keep exposure appropriate. 
  • Sygnia: Positive Results. Add below R8. 
  • MTN: Rally to R100 on the cards. Accumulate on dips below R80.  
  • Glencore: Pulled back with commodity prices. Hold 
  • Naspers: Trading update positive. Buy below R3,000. Target R3,800 

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