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Fed’s interest rate decision unkind to markets

03 May 2019

Fed’s interest rate decision unkind to markets

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Market commentary

SA flag Icon
South Africa

Despite a weaker rand, the JSE made up losses from the previous trading session on Thursday thanks to the strong performance by banks and financials. At the close of trade, the All Share was 0.37% in the green.

US flag Icon
United States

On Thursday, US markets eased gains as investors digested the US Federal Reserve Bank’s (Fed) decision to keep US interest rates unchanged at 2.50%, and oil shares plummeted. Shortly after the JSE closed, the Dow was 0.83% down.

EU flag Icon
Europe

Returning from the May Day holiday, most European indices were in the negative due to the severe share-price drop in SAP, a software firm, and the Fed’s decision to avoid rate cuts. At the close of trade, the STOXX 600 was 0.58% lower.

HK flag Icon
Hong Kong

Although Chinese markets were closed on Thursday, the Hang Seng rose based on positive US-China trade war progress, the Fed’s stable interest rate views and strong performances by financials and property shares. The Hang Seng closed 0.83% up.

Japan flag Icon
Japan

Markets were closed due to a public holiday.

Rand Icon
Rand

The local currency weakened on Thursday, as did most Emerging Market currencies, on the back of the Fed’s decision to keep benchmark lending rates unchanged, and its insinuation that it is unlikely to change rates soon. At 18h10, the rand traded R14.54 against the dollar.

Precious metals Icon
Precious metals

The Fed’s announcement on Wednesday night to keep the US interest rate unchanged had a dismal effect on bullion prices and mining shares on Thursday. At 18h10, spot gold was trading at $1 271.39 an ounce.

Oil Icon
Oil

On Thursday, oil prices plummeted as concerns about oversupply rose drastically in light of the increase in US production and the slower-than-expected impact of US sanction on Iran. At 18h10, Brent crude was trading at $70.97 per barrel.


Market indicators

Local markets (R)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
ALSI 58 743.56 - 0.23 4.23 9.47 13.60 3.90
Gold mining 1 432.68 - 0.31 - 7.63 - 1.57 23.51 30.33
Basic minerals 32 655.34 - 0.66 - 2.05 11.93 14.92 27.99
Industrial index 80 026.24 - 0.19 6.59 13.50 16.38 - 2.47
Financial 42 771.80 0.14 6.55 0.11 7.28 - 2.79
Fin + Ind 30 7 976.76 - 0.08 6.58 8.67 13.20 - 2.59
International markets (Base currency)
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Dow Jones (USD) 26 430.14 - 0.61 0.75 6.06 5.37 12.24
S&P 500 PR (USD) 2 923.73 - 0.75 2.09 8.54 7.80 12.36
NASDAQ (USD) 8 049.64 - 0.56 2.86 11.12 8.89 14.12
FT-100 (GBP) 7 385.26 - 0.44 1.34 6.84 6.10 2.54
Hang Seng (HKD) 29 944.18 0.83 1.09 7.62 13.66 0.85
Nikkei 225 (JPY) 22 258.73 - 0.22 4.97 8.10 2.66 1.15
Paris CAC (EUR) 5 538.86 - 0.65 2.70 11.14 9.62 2.71
Frankfurt (EUR) 5 626.34 0.01 5.02 10.42 7.17 - 3.57
Other markets
Index Current level 1 Day move 1 Month move 3 Month move 6 Month move 1 Year move
Gold ($) 1 271.45 - 0.81 - 1.22 - 3.73 2.91 - 3.00
Platinum ($) 881.00 - 1.89 3.89 7.18 3.89 - 2.11
Brent Oil ($) 70.75 - 1.98 1.99 12.75 - 2.86 - 3.56
Rand/USD 14.53 -0.75 -2.51 -8.74 -0.64 -14.84
Rand/GBP 18.95 -0.63 -1.74 -8.40 -1.02 -10.11
Rand/EUR 16.24 -0.42 -2.02 -6.14 1.38 -7.05
ALBI (R) 662.38 0.02 - 0.12 1.73 8.53 4.97

  1. Some data may be delayed, the above table reflects the latest available information
  2. Performance reported during the first week of each month may be impacted by distributions. Distributions are fully accounted for by the second week of each month


Economic calendar

Local International
  1. ZA: No economic data scheduled to be released.
  1. EU: Inflation Rate YoY Flash APR
  2. US: Non-Farm Payrolls APR
  3. US: ISM Non-Manufacturing PMI APR

Source: Reuters, Business Day, Trading Economics


PSG Product Matrix

Fund matrix

PSG Wealth Solutions
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Enhanced Interest D 3.92 8.02 8.04 8.10 7.86 7.52
PSG Wealth Income FoF D 4.20 7.45 7.91 8.31 8.10 8.14
PSG Wealth Preserver FoF D 4.84 5.79 6.11 6.24 6.37 7.41
PSG Wealth Moderate FoF D 5.85 4.79 5.53 5.65 5.47 7.09
PSG Wealth Creator FoF D 7.43 2.58 4.58 5.20 3.46 5.46
PSG Wealth Global Moderate FF D 3.76 16.11 7.92 4.90 6.52 8.49
PSG Wealth Global Creator FF D 9.12 25.07 15.17 12.05 12.97 -
PSG Wealth Solutions ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Moderate FoF D 5.83 0.78 3.94 4.63 1.70 2.01
PSG Wealth Global Creator FoF D 11.34 8.44 10.75 11.71 7.81 7.68
PSG Wealth Global Preserver FoF (USD) D 4.63 3.75 3.26 4.65 3.38 3.44
PSG Wealth Global Flexible FoF (USD) D 10.16 8.37 9.08 10.62 7.52 6.87
PSG Wealth Solutions (£)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth Global Preserver FoF (GBP) D 3.12 7.95 3.30 7.60 6.51 6.96
PSG Wealth Global Flexible FoF (GBP) D 8.27 14.18 8.22 13.80 10.77 11.73
PSG Asset Management
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Money Market A 2.97 6.65 7.07 7.25 7.10 6.92
PSG Income A 4.28 8.08 8.34 8.47 8.13 7.84
PSG Diversified Income 3.80 6.46 7.53 7.91 7.78 7.68
PSG Stable A 1.67 2.24 5.30 6.22 6.16 6.90
PSG Balanced A - 1.59 - 1.40 2.91 5.08 4.51 6.57
PSG Flexible A - 1.30 - 0.64 3.24 5.52 5.45 7.41
PSG SA Equity D - 3.53 - 10.53 - 1.69 2.56 - -
PSG Equity A - 3.37 - 4.84 0.69 4.96 2.52 5.06
PSG Global Flexible FF A - 2.39 8.67 4.60 5.96 6.67 -
PSG Global Equity FF A - 2.80 7.81 5.05 7.48 6.61 7.87
PSG Asset Management ($)
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Global Flexible USD A - 0.28 - 5.48 1.17 6.05 2.25 2.07
PSG Global Equity USD - 0.66 - 5.87 1.74 7.58 2.18 1.89
PSG Direct Portfolios
Fund 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Direct Flexible Income 3.72 6.83 7.41 7.64 7.40 7.19
PSG Direct Low Equity 1.10 1.73 4.70 5.80 5.62 6.50
PSG Direct Managed - 1.74 - 1.66 2.52 4.71 4.27 6.30
PSG Direct Aggressive - 2.26 - 0.25 2.49 5.18 4.60 -
PSG Direct Global Managed - 2.61 8.18 4.13 5.48 6.18 -
PSG Direct Global Aggressive - 2.86 7.65 4.42 6.44 6.16 -

  1. The PSG Wealth Solutions are exclusively available through registered PSG planners and/or advisers
  2. The above information reflects the latest available data at time of distribution, as such product performance data reflects T-2 numbers
  3. Performance reported during the first week of each month may be impacted by distributions. Distributions are fully accounted for by the second week of each month
  4. The PSG Best Ideas Portfolios were renamed to the PSG Direct Portfolios in February 2018

Equity portfolio matrix

PSG Wealth House View Portfolios
Portfolio 6 Month move 1 Year move 2 Year move 3 Year move 4 Year move 5 Year move
PSG Wealth SA Equity Portfolio 3.33 -3.71 2.97 4.01 - -
PSG Wealth SA Property Equity Portfolio -4.09 -12.30 -4.72 -4.81 - -
PSG Wealth SA Dividend Income Equity Portfolio 2.81 -7.05 4.99 4.42963969421408 4.42963969421408 -
PSG Wealth Offshore Equity Portfolio (USD) 8.29 10.86 14.59 14.13 - -
PSG Wealth Managed Volatility Equity Portfolio -2.82 -11.71 -2.77 - - -

  1. The PSG Wealth equity portfolios are exclusively available through registered PSG planners and/or advisers
  2. PSG Wealth equity portfolio performance are shown gross of management fees, but net of brokerage and other trading costs
  3. PSG Wealth SA and Offshore Equity Portfolio Inception date: 30 August 2015
  4. PSG Wealth SA Listed Property Portfolio Inception date: 1 December 2015
  5. PSG Wealth Dividend Income Equity Portfolio Inception date: 29 April 2016
  6. PSG Wealth Managed Volatility Equity Portfolio Inception date: 28 July 2016
  7. PSG Wealth Funds are exclusively available through registered PSG planners and/or advisers


Recent Investment Ideas

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Highlights

  • We recommend an overweight positioning for TRU SJ; click here to read the full report
  • Return on equity has been under pressure given top-line growth that has been muted given the challenging macro environment.
  • Stronger top-line growth remains the group’s greatest challenge and is largely influenced by economic activity and merchandise inflation.


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Highlights

  • We recommend an overweight positioning for SPG SJ; click here to read the full report
  • Management believes that recent contract wins in the consumer-facing operations and the strong African commodities environment, combined with improved operational efficiencies, should support earnings.
  • A more market-friendly economic approach by the government (post elections) could provide further impetus to earnings of the locally focussed operations


company logo

Highlights

  • We recommend an underweight positioning for NPN SJ; click here to read the full report
  • We feel regulatory changes and slower advertising growth due to a more difficult Chinese macroenvironment are evolving into a significant headwind.
  • This might impact earnings from both the gaming as well as the advertising operations, which are the drivers of sustained earnings growth.


Corporate actions

Date Company Share code Expectation

  1. The information above is to the best of our knowledge correct at the time of distribution but due to the nature thereof cannot be guaranteed.
  2. This document only contains general information and not the opinion of the distributor.

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Author
author

Adriaan Pask PhD

Chief Investment Officer


At PSG Wealth
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