The old stock market adage of “sell in May and go away”, seems to be ringing true for the JSE as we approach May. The JSE (Top 40 future) is pulling back, testing a crucial support level. If this support level holds, we could see our market run to record highs. And the elections could be the catalyst for a strong bounce and rally to the previous highs.
Global markets remain robust as economic growth accelerates. And earnings season is in full swing, we might get a few surprises that cause the market to wobble but the uptrend and momentum remain strong. With the USA being the fastest growing advanced economy, the USD remains ‘King’. The FED is also committed to maintaining monetary policy that is accommodative. They are holding off on rate hikes and looking to implement a back-up plan to Quantitative Easing. This back-up plan will allow American banks to access crucial reserves in the event of any capital constraints. Or, if the bank wants to extend more credit to its clients.
As they say, “A rising tide lifts all boats”. And the equity tide is rising, so don’t sell in May and go away but rather use weakness to pick quality companies at prices you missed earlier.
The week ahead:
- Local Data: M3 Money Supply 30/04); Electricity Generation and Distribution, Manufacturing: utilisation of production capacity by large enterprise (02/05)
- Results Due: NFP, TMT (29/04); APH, BWZ (29/04); CTK, MNK, OAS (03/05)
- LDT (29/04): ASHINF, ASHMID, ASHT40, PFB
Other Economic data releases of interest…
- Tuesday: Spanish Flash GDP, German Prelim CPI, Prelim Flash GDP (EU); GDP, BOC Gov Poloz Speaks (CAN); Unemployment Rate (NZL); CB Consumer Confidence (USA)
- Wednesday: Manufacturing PMI (UK); ADP Non-Farm Employment Change, ISM Manufacturing PMI, FOMC Statement, Federal Funds Rate (USA); BOC Gov Poloz Speaks (CAN); Caixin Manufacturing PMI (CNY)
- Thursday: BOE Inflation Report, Monetary Policy Summary, Official Bank Rate, BOE Gov Carney Speaks (UK); Building Approvals (AUS); Treasury Currency Report (USA)
- Friday: ISM Non-Manufacturing PMI, Unemployment Rate (USA); Services PMI (UK); Core CPI Flash Estimate (EU)