The Week Ahead

  • US equity markets need a push from corporate earnings to move substantially higher

    The week kicked off with Brent crude oil hitting a recent high of just under $75/bbl on news that the White House has ended sanctions waivers on countries that buy oil from Iran. If implemented fully, this may well result in Iran’s economy being strangled and with the US, Saudi Arabia and the UAE promising to make up any shortfall, the price impact on oil should be minimal.  

    The S&P 500 closed -0.1% lower at 2 905 on Thu 18 Apr. There appears to be little enthusiasm on US markets to take the S&P 500 substantially higher in the short term. Corporate earnings are forecast to be pretty much in line with expectations and by the end of this week, almost half of the S&P 500 component companies will have reported. It will take some very positive surprises to make any serious difference to the S&P 500, as a lot of good news is already priced into the index. This would include progress on US-China trade talks, the better than expected Chinese economic performance and the dovish stance currently being displayed by the US Federal Reserve on inflation and interest rates.

    First quarter US GDP growth is released on Fri this week and the number will be watched closely by markets for any sign that the US economy is faltering.  However that seems unlikely-the jobless claims figure released last week was the lowest in 50 years and underlines the widely held view that US economic consumption growth remains intact.

    The JSE All Share Index (Alsi) closed 1.4% on Thu 18 April at 59 222. It is now only 4% below its all-time high of 61 685 set on 25 Jan 2018.

    EOH CEO Stephen van Coller gave an outstanding presentation to local investment analysts at the presentation hosted by the Investment Analysts Society of South Africa (IASSA). The market certainly liked his tone and the share price rose more than 50% on the day. It is becoming clear that van Coller’s no-nonsense approach with EOH is paying off.

    Economic related events this week;

    23 Apr                                                            SA Leading Indicator Feb

    24 Apr                                                            BER Consumer Confidence Indicator Q1

    25 Apr                                                            SA PPI Mar, US GDP Q1