Local equity market and the all-share index gained 3.41% in February

Wealth

Local Markets bouncing back

With the South African market bouncing back strongly, the international markets would seem to follow suit by starting the year on an equally solid note. 

February was another solid month for the local equity market and the all-share index (ALSI) gained 3.41% for the month, bringing the total market return to 6.31% for the year to date. With the South African market bouncing back strongly, the international markets would seem to follow suit by starting the year on an equally solid note. In the United Kingdom, the FTSE 100 index returned 6.28% in the shadow of a looming Brexit. In the US, the S&P 500 returned a massive 11.39%, while the German DAX yielded 8.79% in the first two months of the year.

Although the rating agency Standard & Poor’s kept Eskom at junk status, it revised the outlook from negative to stable, the power utility said on Friday. Government’s proposed plans had met with the rating agency’s approval.

The pace of US growth slowed in the final quarter of last year, coming in at 2.6%, though the growth rate was stronger than economists’ estimates. For the entire 2018, the US economy grew 2.9%. Growth slowed at the end of the year, fuelled in part by weakness in Europe and China. The dollar strengthened against most currencies, as US interest rates and a call for an interest hike came back into focus. This put some pressure on the rand, and the local currency traded down to around R14.23 to the USD.

Manufacturing purchasing managers’ indices in China, the eurozone and Japan all remained in contractionary territory in February, while the pace of growth in US manufacturing slowed further, falling to 54.2 from 56.6 in January. The US-China trade war has been a significant headwind to global trade and markets hope that an agreement next month will improve sentiment around the world. A US-China deal will also have positive effects on local markets and economic growth.

The price of Brent crude oil seems stable around $65 per barrel, but a prolonged weaker rand could impact negatively on the price consumers pay for fuel. The currency will be closely watched this week to see if the weakness continues.

 

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Market data provided by I-Net | News article provided by Securitas with 4D Wealth

Fanie Wasserman, B. Com (Hons)(UJ), PDFP (UOVS), CFP®fanie@securitas.co.za
Johan Steyn, RFP®, Cell. 082 680 9510, johan@securitas.co.za
Albert van der LindeB. Com (US), B. Com (Hons)(UP), Cell. 076 087 3084, albert@securitas.co.za
Hannes Bresler, CFP®, B. Com (Hons)(UJ), Pr. Tech Eng, Cell. 082 823 7973, hannes@securitas.co.za

Michelle Kleinhans, 082 850 3092, michelle.kleinhans@securitas.co.za