12/02/2018
STANLIB Morning Market Commentary
Monday, 12 February 2018
US markets were still volatile on Friday, but closed up. The Dow gained +1.4% to 24,190 (down -5.2% on the week), the S&P 500 Index rose by +1.5% to 2,619 (-2% in 2018), the Nasdaq rose by +1.4% to 6,874 and the Russell 2000 Index gained +0.96%. American Express rose by +3.8%, Microsoft +3.7%, Nike +4.8%, GE +3.4%, Mattel +7.9%, Nvidia +6.7% and Alphabet +3.8%, while Expedia fell by -15.5%, Trip Advisor -4.3% and Baker Hughes -3.6%. The US government overcome its short-term shutdown as the House and Senate signed a deal. There is still some uncertainty about how much more unwinding of short volatility positions there is, on the Volatility or VIX Index, so further market weakness cannot be ruled out.
The Dow Jones Euro Stoxx 50 Index fell by -1.5% to 3,325, while the FTSE 100 Index fell -1.1% to 7,092 (-7.7% in 2018).
Asian markets are doing better, with Aussie -0.3% (BHP +1.7% with oil -$1.10 and iron ore up $2 at $77), Shanghai is +0.8%, the Hang Seng in HK is +0.7% (Tencent +2.5%), the H Index of mostly state-owned Chinese shares that trade in HK is +0.9%, India is +0.6% and the Nikkei is closed for a holiday), with a stronger yen at 108.7 from 109.0 to the dollar.
The ALSI fell by -1.3% or -733 points to 55,902, -9.4% from its recent high, back at August levels (-6.1% in 2018). Financials fell -1.3%, Industrials fell -1.4% (Naspers -1.8%) and Resources fell -1%. There was 1 new high in Mustek and 8 new lows in Sibanye, British Am To***co, Reinet, ABInBev, Alaris, SilverB, IMCB22 and Datatec. The ALSI 40 fell -1.3%, the Mid-Caps fell -1.3% and the Small-Caps fell -0.8%. Naspers fell yesterday for the 10th straight session, its longest losing streak in 15.5 years (-27.4% below its November record high and back at August levels, like the ALSI). Naspers has underperformed Tencent by 20% over the past 7 weeks. Based on Tencent’s current share price, Naspers is worth R4900, says RMB Morgan Stanley. Interesting that the ALSI fell less than the US markets and less than Asian markets, also the Nikkei; probably a buying opportunity all-round.
The US 10-year yield is up 2 basis points at 2.85%, while the German 10-year is down 1 basis point at 0.75%, while our SA 10-year yield is up 1 basis point at 8.44, close to the lows of the past year or so.
The US dollar is down vs the euro at $1.228 from $1.226. The dollar is up versus the pound at $1.386 from $1.396, while the rand is up versus the dollar at 11.97 from 12.09, up strongly versus the pound at 16.57 from 16.88, up too versus the euro at 14.70 from 14.83….and up versus the Aussie dollar at 9.37 from 9.41. The rand ended 2016 at 13.69 to the dollar, so was up +10.6% in 2017, also up +1.4% versus the pound, but down -2.3% versus the euro. It ended 2017 at 12.37/$, so is up +3.2% in 2018 versus the dollar.
US S&P futures are +0.6% this morning. Oil is down -$1.10 at 63.30, its 6th straight down-day, Gold is up $5 at $1323, while Platinum is down -$3 at $969 and Palladium is up +$21 at $985. The copper price is up +$2 at $308. Steinhoff International says Christo Wiese has reduced his stake in the company from 21% to 6% and is now the 2nd biggest shareholder after the PIC. Very surprising! There is no further explanation or comment. Asset manager 360ne is said to have written a damaging report on Resilient, NepiRockcastle, Fortress and Greenbay. Resilient says it will comment further today on the report.
