Most global financial markets were lower on the week with rate hikes and higher oil prices contributing to market volatility.

On Wednesday the U.S. Federal Reserve hiked its federal funds target rate 50 basis points to between 0.75% and 1%, the first half-point hike since 2000. Officials also announced that the Fed would begin allowing its holdings of Treasuries and agency mortgage-backed securities to decline in June at an initial combined monthly pace of USD 47.5 billion, stepping up over three months to USD 95 billion. The markets’ initial reaction was fairly muted as the rate hike was largely in line with market expectations, at the post-meeting press conference Fed Chairman Powell went on further to add that a hike of 75 basis points was “not something we are actively considering.” In late trade on Wednesday the major indices rallied but what followed on Thursday was an aggressive sell-off with investors reconsidering the prospects of the Fed’s tightening cycle needing to be more aggressive to rein in inflation. 

Nonfarm payroll employment in the United States rose a solid 428,000 in April, while the unemployment rate held steady at 3.6%. There was some encouragement of some easing labour market pressures with average hourly earnings rising 0.3% in April, down from 0.5% in March and below expectations.

The S&P 500 (-0.21%) and Nasdaq (-1.54%) were both down for a fifth straight week, while the 10-year U.S. Treasury note yield breached 3.00% over the week, climbing as high as 3.1% on Friday as long-term inflation expectations increased.

With about 87% of the constituents of the S&P 500 Index having reported for Q1 2022, 79% have reported actual EPS above estimates, which is above the five-year average. In terms of revenues, 74% of S&P 500 companies have reported actual revenues above estimates.  The forward 12-month P/E ratio is 17.6, which is below the five-year average (18.6), according to data from FactSet Research.

Shares in Europe weakened amid the ongoing Russian invasion and the prospect of tighter monetary policy. In local currency terms, the pan-European STOXX Europe 50 Index ended 0.89% lower. In the UK, inflation hit a 30-year high in February driven by soaring household energy bills and petrol prices putting pressure on the Bank of England to continue raising interest rates. The consumer price index rose an annual rate of 6.2%—exceeding the median forecast of 6%.

Japan’s stock markets rose over the week, with the Nikkei 225 Index gaining 4.93%. Sentiment was boosted by expectations of further economic stimulus and reassurances from the Bank of Japan (BoJ) that it will maintain very accommodative monetary policies. Chinese markets fell amid delisting fears for U.S.-listed Chinese companies arising from a simmering bilateral dispute over auditing standards. For the week, the benchmark Shanghai Composite Index ended 1.2% in the red.

Market Moves of the Week:

Platinum miners and banks led the rout on the JSE on Friday, with the JSE All Share index closing the week over 6% lower as inflation fears gripped world stock markets. All the major sectors were off sharply.

The Absa Purchasing Managers’ Index, a key gauge of confidence in the manufacturing sector, slid to 50.7 in April from 60 in March, suggesting a sharp monthly contraction in manufacturing output at the start of the second quarter, in part because of the KwaZulu-Natal floods.

Moody’s forecasts South Africa’s inflation to hit 8% in 2022, in a report released on Wednesday amid the global impact of the Ukraine conflict and rising U.S. interest rates, higher than the South African Reserve Banks’s 3-6% target range for the year.

The rand was weaker for a third week in a row, by Friday close the rand was trading at R16.02 to the dollar.

Chart of the Week:

This past Wednesday, the Federal Reserve increased its benchmark interest rate by half a percentage point, in line with market expectations. The funds rate target now stands at 0.75%, already ahead of where the markets expected it would be, and up from zero before the rate hikes began in March with a quarter-point increase. Current market pricing has the rate rising to 2.75%-3% by year’s end.

Investor anxiety has been heightened recently by the war in Ukraine and impending rate rises by the Federal Reserve. As such, we advise investors to maintain a calm stance during the crisis, diversify, and maintain exposure to long-term themes. Investors need to look beyond near-term news and gain exposure to industries benefiting from longer-term growth trends.

Financial markets shifted their focus from inflation concerns to corporate earnings and a deteriorating outlook for global growth this week. Weaker European economic activity caused by the war in Ukraine, Chinese pandemic lockdowns; and a surprise contraction in first quarter U.S. GDP growth, weighed on stock markets. As a result, U.S. equities revisited the lows of this year, with the S&P 500 now down about 14% and the Nasdaq down 24% from their peaks.

It was a busy week for the first-quarter earnings season in the U.S., with more than one-third of S&P 500 companies reporting results, including Alphabet (Google), Amazon, Apple, Meta (Facebook) and Microsoft which together make up 21% of the S&P 500 Index. In summary, results were mixed:

• Alphabet’s first quarter revenue increased by 23% but missed estimates after the war in Ukraine hurt YouTube ad sales. Alphabet’s board also announced $70 billion in share buybacks.
• Amazon.com delivered a disappointing quarter and outlook, caused by higher costs to run its warehouses to deliver packages to customers. The company surprised investors with its first quarterly loss since 2015, sending its share price down 14% on Friday.
• Apple reported record sales ($97.3bn) and profits ($25bn) for the quarter ahead of market expectations but delivered a more cautious outlook due to lockdowns in China impacting production and the war in Ukraine denting sales. The board increased its dividend by 5% and authorised a $90bn share buyback program.
• Meta posted a profit ahead of consensus, coming in at $2.72 per share compared to estimates of $2.56. The earnings beat was tempered by Meta recording its slowest revenue growth in a decade (7% sales growth to $27.91bn).

Microsoft reported the strongest results of the tech giants, reporting revenue of $49.36 billion in the quarter, compared with $41.7 billion a year earlier. Net income rose to $2.22 per share from $2.03 per share a year earlier. The company on Tuesday forecast double-digit revenue growth for the next fiscal year, driven by demand for cloud computing services.

The biggest data surprise of the week, came from the U.S. Commerce Department, showing that the U.S. economy contracted at annualised rate of 1.4% in the first quarter, well below consensus expectations of a 1.1% expansion. In the prior quarter, annualised GDP increased by 6.9%. The sharp deceleration was due to weaker exports and a decline in inventory spending following a sizable increase in the prior quarter. But consumer spending, which accounts for nearly 70% of the U.S. economy, continued to grow at a solid pace.

The eurozone economy expanded by 0.2% in the first quarter, as surging commodity prices and disruptions related to Russia’s invasion of Ukraine weighed on growth. This preliminary estimate was less than the 0.3% forecast by the European Commission just before the war started. At the same time, a report from the LSE, indicated that Brexit has caused UK imports from the EU to drop by 25%.

Swedish and Finnish policy makers have agreed to seek entry into the NATO defence bloc simultaneously in mid-May, according to media reports in both Nordic countries. Meanwhile, Russian Foreign Minister Sergei Lavrov accused NATO and its allies of using Ukraine as a proxy to fight with Russia.

In other news, Emmanuel Macron won a second term as president of France, defeating Marine Le Pen, leader of the far-right National Rally party with 58.5% of the vote, compared to 41.45% for Le Pen.

China’s central bank pledged to increase support for the economy, seeking to reassure investors, as the growth outlook for China worsens. The People’s Bank of China “will step up the prudent monetary policy’s support to the real economy”. It reiterated it will keep liquidity reasonably ample. China’s State Council also pledged to promote the growth of internet platform firms. “The healthy development of the platform economy should be facilitated to drive the creation of more jobs,” according to a statement issued after a meeting of the State Council.

Late selling in the U.S. on Friday saw the Dow Jones (-2.47%), S&P 500 (-3.27%) and Nasdaq (-3.93%) all ending the week sharply down. European and Asian markets also ended the week in negative territory with the Euro Stoxx 50 (-0.97%), Nikkei 225 (-0.95%), and Shanghai Composite Index (-1.29%) all softer. The exception was the FTSE 100 (+0.30%) ending the week stronger. The U.S. dollar continued to strengthen this week, with the U.S. Dollar Index, which measures the U.S. currency against a basket of 6 other developed market currencies, increasing by +6.4% year-to-date.

Market Moves of the Week:

On Friday, health officials and scientists warned that South Africa may be entering a fifth COVID wave earlier than expected after a sustained rise in infections over the past 14 days that seems to be driven by Omicron sub-variants. Health Minister Joe Phaahla told a briefing that although hospitalisations were picking up there was so far no dramatic change in admissions to intensive care units or deaths.

The JSE All-Share Index managed to end the week in positive territory (+0.24%), supported by the resource sector (+1.16%). Industrial (-0.24%) and financial (-0.90%) shares were weaker. By Friday close, the rand was trading at R15.75 to the U.S. Dollar, having reached a mid-week high of R16.13.

Chart of the Week:

Whilst recession and stagflation talk (high inflation, low growth) has surfaced in recent weeks, it felt premature given the current strength of consumer demand and the strong U.S. labour market. That at least was what was believed until the publication of the first gross domestic product growth figures for the U.S. in the first quarter, which showed amazingly that the economy was already shrinking. During the post-Volcker era, going back some four decades now, negative-growth quarters have been very rare. Source: Bloomberg.

Investor anxiety has been heightened recently by the war in Ukraine and impending rate rises by the Federal Reserve. As such, we advise investors to maintain a calm stance during the crisis, diversify, and maintain exposure to long-term themes. Investors need to look beyond near-term news and gain exposure to industries benefiting from longer-term growth trends. As always, we appreciate your support and value your trust in LNKD Investment Managers.

Federal Reserve Chair Jerome Powell said this week, at an event hosted by the International Monetary Fund, that a 50-basis-point rate hike could be “on the table” and that “it is appropriate…to be moving a little more quickly.” In addition, Powell suggested that front loading the rate hikes may be required to combat sticky inflation. The market is now pricing in a 50 basis point hike for the next three meetings in May, June and July. 

“Central bankers need to act decisively on inflation now to ensure a smooth landing,” IMF’s chief economist Gita Gopinath stated this week. Globally, central banks are now tasked with ensuring a soft landing for their respective economies, weighing up rate hikes against supporting growth. Although the majority of central banks are striking a hawkish tone, recent warnings of slowing growth, specifically in the Euro area, could complicate the path. However, European Central Bank president Christine Lagarde, freshly stated that “there is a high chance rates will be increased this year.” 

The Russian-Ukraine war continued into its 8th week, with Vladimir Putin recently claiming that Russia had seized the strategic port city of Mariupol, even though heavy fighting continues in the area. The war has shown few signs of ending soon and its impact is still being measured globally. However, it is clear that the conflict in Eastern Europe has deepened western alliances, resulting in a move from globalisation to regionalisation. 

Chinese markets had a tough week, as investors worried about the economic repercussions of their harsh, nationwide covid-19 lockdowns. Foreign investors pulled 5.6 billion yuan ($868 million) from mainland stocks this month after selling 45 billion yuan ($7.1 billion) in March, the largest withdrawal in nearly two years. President Xi Jinping, however, defended the lockdowns, claiming that “Safety and health are the prerequisites for human development and progress.” 

Economists, polled by Bloomberg, have cut China’s 2022 growth outlook (measured by Gross Domestic Product) from 5% to 4.9% due to the lockdowns’ negative impact on the economy and supply chain. Bloomberg stated that it could take up to three months before supply chain disruptions from China’s current lockdowns are felt in the U.S, adding to the drag on global growth. 

It’s earnings season in the U.S., and less than 20% of S&P 500 companies have reported earnings so far. According to FactSet, the blended growth rate for earnings is up from 4.7% at the end of the quarter, to 6.5%. Most notably, shares in the consumer staples sector gained ground after reporting their results. Yet, a number of shares have come under pressure as fewer companies are beating estimates compared to prior quarters. Shares of Netflix fell more than 35% during the week, erasing >50bn of value, as the company reported disappointing quarterly results. 

Major indices’ ended the week lower as investors struggled to maintain conviction amidst a complicated global backdrop. In the U.S., the S&P 500 Index dropped -2.75% over the week and is now down -10.94% year to date. The Nasdaq fell -3.83% while the Dow Jones ended the week -1.86% lower. Europe (Euro Stoxx 50) faired better, down -0.23%, while the FTSE 100 dropped -1.24%. Asian indexes were mixed, with the Nikkei 225 being the only major index to end the week in the green (+0.04%), while the Shanghai Composite fell -3.78%. Brent crude dipped -4.52%, while Gold dropped by -2.03%.

Market Moves of the Week:

South Africa’s headline inflation rose slightly less than expected to 5.9% (Cons: 6.0%) in March, up from 5.7% in February and just below the Reserve Bank’s upper limit of 6%. Core inflation jumped from 3.5% to 3.8% over the month, surprising to the upside. Petrol inflation and alcohol/tobacco prices were the main contributors to the increase, with food inflation diminishing somewhat.

On Monday, Cyril Rhamaphosa declared a national state of disaster in response to the KZN floods, a move that should allow for a more effective response to the crisis. The floods have left thousands homeless and killed more than 440 people. It is estimated that R5.6 billion worth of road damage was also caused by the floods and mudslides. 

The rand weakened the most in five months as power cuts, KZN flood damage and signs of a Covid comeback added to investors’ worries about South Africa’s economic outlook. South Africa’s benchmark bonds and other assets also struggled this week amid expectations of a more hawkish U.S. Federal Reserve. 

In other news, state power utility Eskom, warned the country that they may have more than 100 days of load shedding this year.

The JSE All-Share Index fell -1.52% this week. Resources sold off (-7.42%) while Industrials caught a bid (+2.20%). The rand depreciated over 5.5% this week to end at 15.53 USD/ZAR.

Chart of the Week:

Global transactions using the euro dropped to 35.4% of the total in March, its biggest percentage-point drop in more than a decade as inflation and the war in Ukraine weighed on the currency’s appeal. The dollar remained in the top spot for a 10th consecutive month and has dominated global payments for the most part since 2013, according to SWIFT. Source: Bloomberg

Investor anxiety has been heightened recently by the war in Ukraine and impending rate rises by the Federal Reserve. As such, we advise investors to maintain a calm stance during the crisis, diversify, and maintain exposure to long-term themes. Investors need to look beyond near-term news and gain exposure to industries benefiting from longer-term growth trends. As always, we appreciate your support and value your trust in LNKD Investment Managers

Consumers around the world are paying much higher prices for basics like shelter, food, and gasoline as Russia’s Ukraine invasion further disrupts supply chains and cuts off access to oil and food exports. After a pandemic-related wave of higher prices, the conflict is now pushing global inflation higher.

In the U.S. consumer prices rose 8,5% in March while prices in the UK climbed 7% with the U.S. consumer price index, which measures a wide-ranging basket of goods and services, jumping to its highest level since December 1981. To combat inflation, the Federal Reserve has begun raising interest rates and is expected to continue doing so through the remainder of the year.

However, there were signs that U.S. core inflation appeared to be moderating (core inflation excludes food and energy), with core CPI increasing 6.5% on a 12-month basis, rising 0.3% for the month of March, less than the 0.5% estimate. Sparking hopes that inflation is easing and that March might represent the peak.

In other central bank news, the Bank of Canada and the Reserve Bank of New Zealand each raised rates 50 basis points this week also in an effort to combat rising inflation.

China’s latest Covid lockdowns are adding to global inflation concerns, over the last several weeks the world’s second largest economy has tackled its worst Covid wave. Chinese health authorities on Thursday reported more than 29,000 new infections, the highest daily tally since the pandemic broke out in the central city of Wuhan more than two years ago. The country’s zero-tolerance approach has seen up to forty-five cities, accounting for up to 40% of China’s economic output, implementing a full or partial lockdown. China’s producer price index and consumer price index rose faster-than-expected in March, according to data out Monday.

The major U.S. indices ended the holiday-shortened week posting weekly losses. Some of the major banks kicked off Q1 earnings season with mixed results. Earning releases will hit full stride next week, as seven Dow blue-chip names report: IBM, Procter & Gamble, Travelers, Dow Inc, Johnson & Johnson, American Express and Verizon which should give investors insight into how corporates are navigating the higher inflationary environment. The S&P 500 ended down 2.13% for the four-day holiday week with the Nasdaq Composite off 2.63%, and the Dow down 0.78%.

The European Central Bank (“ECB”) reiterated that it would end its asset purchase program in the third quarter as it seeks to balance inflation which reached 7,5% in March. ECB President Christine Lagarde said, after the meeting, that policymakers would “maintain optionality, gradualism, and flexibility in the conduct of our monetary policy.” She also said there was no clear timetable for raising interest rates. Markets are pricing in a rate rise of about 0.7% by the end of the year. In local currency terms, the pan-European STOXX Europe 50 Index ended the holiday-shortened week slightly lower (-0.24%) while the UK’s FTSE 100 fell 0.79% as energy stocks weakened.

Japan’s stock markets gained over the four-day period, with the Nikkei 225 Index rising 0.40% with Bank of Japan (BoJ) Governor Haruhiko Kuroda asserting that Japan’s economy will continue to recover despite surging commodity prices and that the bank would maintain its monetary stimulus to support the still-fragile post-coronavirus recovery. In China, markets retreated over the week as surging coronavirus outbreaks fuelled concerns around slowing economic activity and supply chain disruptions. The benchmark Shanghai Composite Index was down 1.34% over the week.

Market Moves of the Week:

A devastating flood in South Africa’s eastern coastal province, KwaZulu-Natal, has left at least 341 people dead, the South African government said on Thursday. The province was declared a disaster area on Wednesday after heavy rains flooded homes, washed away roads and bridges, and disrupted shipping in one of Africa’s busiest ports.

In economic news, South African retail trade sales fell for the month of February 0.9% year on year, Statistics South Africa (Stats SA) said on Wednesday. This compared with market expectations of a 1.1% increase. On a seasonally adjusted monthly basis, retail trade was down 0.5% from January.

The JSE All-Share Index was down on the week with the financial (-4.23%) and industrial (-1.56%) sectors coming under pressure, while resource counters were modestly off for the week. By Thursday’s close, the rand was trading at R14.65 to the U.S. Dollar.

Chart of the Week:

China’s imports fell in March and export growth slowed, with Covid lockdowns disrupting port operations and weakening domestic demand. Imports fell 0.1% from a year earlier in dollar terms, the first drop since August 2020 while exports grew 14.7%, customs data showed Wednesday, slower than the 16.3% increase in the combined figures for January and February.

Investor anxiety has been heightened recently by the war in Ukraine and impending rate rises by the Federal Reserve. As such, we advise investors to maintain a calm stance during the crisis, diversify, and maintain exposure to long-term themes. Investors need to look beyond near-term news and gain exposure to industries benefiting from longer-term growth trends. As always, we appreciate your support and value your trust in LNKD Investment Managers.

After about a 10 percent move higher in global equities since mid-March lows, equity markets pulled back slightly this week, while longer-term bond yields rose to three-year highs. Central to this was the release of the Federal Reserve and ECB’s March meeting minutes, which laid out plans for speedier policy tightening and further imposed sanctions on Russia.

Federal Reserve officials laid out a long-awaited plan to shrink their balance sheet by more than $1 trillion a year while raising interest rates “expeditiously” to counter the hottest inflation in four decades. The Fed signalled it will reduce its massive bond holdings at a maximum pace of $95 billion a month, this is much faster than the peak rate of $50 billion a month the last time the Fed trimmed its balance sheet, from 2017 to 2019. Beyond the balance sheet, the minutes showed that “many” officials would have preferred to raise rates by a half percentage point following the March meeting.

Minutes from the ECB’s March meeting were also more hawkish than expected, with many policymakers indicating that conditions for lifting interest rates had either been met or would soon be met. Some argued for winding down the central bank’s asset purchase program by September.

Following on from the U.S.’s ban on investment in Russia, the European Union (EU) also imposed more sanctions this week, after reports that Russian forces had committed war crimes in Ukraine. European proposed sanctions include the banning of Russian coal imports and new machinery exports to Russia. After sparring between EU members, the phase-in period for the embargo was extended to four months. Eurozone investor confidence decreased to -18.00 in April; the lowest reading in nearly two years, compared to March’s reading of -7.00.

Shanghai has been under a citywide, two-stage lockdown that began on March 28 to stop the virus’s spread. With 23 Chinese cities currently under total or partial lockdown, an estimated 193 million people are affected in areas that account for 13.5% of China’s economy. China has signalled it will loosen monetary policy as authorities seek to combat an escalating Covid outbreak, slumping property market and spiking commodity prices. Officials will use monetary policy tools at an “appropriate time” and consider other measures to boost consumption, according to the readout from a meeting of the State Council. The People’s Bank of China is expected to cut the bank’s reserve requirement ratio in the second quarter.

China’s market regulators also proposed revising confidentiality rules involving offshore listings. The move signals a possible breakthrough in the disagreement that has raised the risk of the delisting of approximately 270 U.S.-listed Chinese companies as early as 2024. However, tensions between the U.S. and China remain high, with the U.S. regulator dismissing the suggestion of an immediate deal that would halt de-listings, stating that only total compliance with the U.S. audit inspections will allow Chinese companies to keep trading on U.S. markets. The U.S. deputy secretary of state has also warned China that it might face sanctions if it provided material support to Moscow. At the same time, Biden’s administration has equally warned India against further cosying up to Russia.

The IMF downgraded Japan’s economic growth outlook for 2022 from 3.3% to 2.4%, due to higher commodity prices and elevated uncertainty relating to the Ukraine conflict impacting domestic demand. Japanese household spending dropped in February for a second straight month.

Russia slipped closer to a technical default after foreign banks declined to process about $650 million of dollar payments on its bonds, forcing it to offer rubles instead. While Russia’s finance ministry said it “fulfilled its obligations,” neither of the securities involved allowed payment in rubles. This comes after the U.S. Treasury said it was halting dollar debt payments from the nation’s accounts at U.S. banks. Russia has so far sidestepped its first external default in a century, but the Treasury move this week to halt dollar debt payments has reignited investor concerns.

Global equities were negative. In the U.S., the Dow Jones (-0.28%), S&P 500 (-1.27%) and Nasdaq (-3.86%) were all in negative territory. Similarly, the Euro Stoxx 50 (-1.54%), Nikkei 225 (-2.46%), and Shanghai Composite Index (-0.94%) were all softer. The exception was the FTSE 100 (+1.75%) ending the week stronger. The price of brent crude oil decreased by -1.92% this week to USD 102.35 a barrel but remains up +31.59% year-to-date.

Market Moves of the Week:

The big news out of South Africa was the announcement of the end to the state of disaster declared more than two years ago to manage the coronavirus pandemic. Transitional measures, including the wearing of face masks at indoor public spaces and limits on gatherings, will remain in place until new regulations are promulgated next month.

On Wednesday, Moody’s maintained its non-investment grade rating of Eskom at Caa1 with a negative outlook and warned that the power utility must urgently get to grips with its debt burden and operational problems if it hoped for an upgrade. This comes after Moody’s upgraded its outlook on South Africa from “negative” to “stable”.

The JSE All-Share Index ended the week down -1.49%, led lower by industrial (-2.76%) and financial (-3.17%) shares, whilst resource shares (+0.91%) continue to benefit from higher commodity prices. By Friday close, the rand was trading at R14.66 to the U.S. Dollar.

Chart of the Week:

Following on from the EU’s ban of Russian coal imports this week, energy security remains front of mind. According to BloombergNEF, fully replacing Russian oil will be difficult, if not impossible, in the event of widespread sanctions. Increased production by Saudi Arabia and the UAE, procuring more oil from Iran, and International Energy Agency (IEA) demand curbs will only offset 92% of Russian barrels consumed globally.

Investor anxiety has been heightened recently by the war in Ukraine and impending rate rises by the Federal Reserve. As such, we advise investors to maintain a calm stance during the crisis, diversify, and maintain exposure to long-term themes. Investors need to look beyond near-term news and gain exposure to industries benefiting from longer-term growth trends.

As always, we appreciate your support and value your trust in LNKD Investment Managers.

The situation in Ukraine continues to evolve, with the globe now focusing on Russia-Ukraine peace talks. Delegates from the two nations met multiple times this week in Istanbul, Turkey for face-to-face meetings. Russia claimed it would reduce attacks and its military activity near Kyiv and the northern city of Chernihiv, while Ukrainian officials have advocated for a ceasefire agreement – the negotiations are still ongoing. Russia also said this week that the first phase of its “special military operation” was complete and that it would now focus on Ukraine’s eastern Donbas region. This move surprised analysts and may suggest that Russia is looking to scale back its invasion.

The Biden administration announced on Thursday that oil reserves from the nation’s Strategic Petroleum Reserve would be released to combat high gas prices and inflationary pressures. The United States will release a million barrels of oil a day for six months, helping them achieve independence from foreign energy suppliers. 

In U.S. economic news, the Federal Reserve’s favourite inflation indicator, the personal consumption expenditures price index, jumped 6.4% y/y in February, the fastest pace since January 1982. On another note, nonfarm payrolls in the U.S. expanded by 431 000 for the month of March, below expectations of 490 000, while the unemployment rate came in at 3.6% vs 3.7% expected.

U.S. Treasury yields inverted this week, with the spread between the U.S. 2-year Treasury note and the 10-year rate inverting for the first time since 2019. This spread is often monitored by investors as an inversion can sometimes signal an oncoming recession. The Federal Reserve however monitors the spread between the 10-year and 3-month Treasury rates, using it as their favoured leading indicator. 

Estimates showed that Euro-area headline inflation rose to 7.5% in March, compared with 5.9% in February. This spike in inflation calls into question the 5.1% inflation prediction that the European Central Bank (ECB) had projected for the year. Money markets are now pricing in more than 50 basis points of hikes from the European Central Bank in 2022.

China’s zero-tolerance policy towards Covid-19 is deteriorating its business conditions and is directly impacting the operations of the world’s largest container port in Shanghai; reducing its efficiency. China’s biggest city, Shanghai, entered into a two-stage lockdown on Monday, the outcomes of which could significantly impact the Chinese economy. Chinese Covid impacted areas cover c. 30% of China’s GDP; and have been costing roughly $46Bn a month, or 3.1% of Chinese GDP (according to Goldman Sachs estimates).

Weak manufacturing data was released from China this week, with March’s producer manufacturing index coming in at 48.8, down from 51.2 the previous month. It is estimated that the decline understates the degree of business slowdown and deterioration in China, as the survey was closed on March 25 – three days prior to Shanghai locking down.

Major indices’ movements were fairly muted this week as global investors processed geopolitical headlines and fresh inflation figures. The S&P 500 Index managed a 0.06% gain, closing out its best month since December but its worst quarter since early 2020. The Nasdaq had a slight bounce, up 0.65% while the Dow Jones ended the week -0.12% lower. Europe (Euro Stoxx 50) maintained momentum, rising 1.32% while the FTSE 100 climbed 0.73%. Asian indexes were mixed, with the Nikkei 225 down -1.72% and Shanghai Composite up 2.19%. Brent crude fell -12.49% this week following Biden’s announcement to release oil reserves, while Gold dropped by -1.73%.

Market Moves of the Week:

Negative economic data prints came out of South Africa this week, with Q421 unemployment and Feb PPI producing gloomy figures. SA unemployment, which has been severely impacted by Covid-19, rose in the last quarter of last year to 35.3% (2.8% y/y), the highest rate since the start of the quarterly labour force survey in 2008. A look through into the numbers shows that the labour force grew by 2.5% q/q while only 1.8% q/q were employed. A priority area of government, youth category unemployment (15-24 years), remained lofty at 66.5% in Q421. 

South Africa’s producer prices increased more than economists expected in February. PPI for final manufactured goods rose to 10.5% y/y (estimate +10.2%) versus +10.1% in January. The main contributors were within the coke, petroleum, chemical, rubber and plastic products grouping. The marked fuel price hike implemented in March will see further upwards pressure within this category of the PPI basket.  
    
In an attempt to combat rising fuel costs for South Africans and support the phasing in of fuel price increases, the government announced that it will reduce its fuel price levy by R1.50/l for two months in April and May. Around R6 billion of the state’s strategic oil reserves will be sold to offset the tax hit.

Moody’s, the international credit rating agency, upgraded its outlook on South Africa from “negative” to “stable” on Friday. “South Africa’s fiscal position has markedly recovered from the pandemic thanks to government’s fiscal consolidation measures and positive external developments,” Moody’s said. The agency, however, kept South Africa’s government bonds “junk” rated (two levels below investment grade).  

The JSE All-Share Index managed to outperform its developed market peers this week, ending the week up 2.13%. Financials had the hardest run, up 3.62% while resources remained steady, rising 0.31%. The Rand depreciated over the week to end at 14.61 USD/ZAR.

Chart of the Week:

Eurozone inflation surged 7.5% y.y, up from 5.9% in February, overshooting estimates. Energy had the highest annual rate in March as Russia’s invasion of Ukraine provided a fresh driver for already-soaring energy costs. The spike in inflation leaves the ECB with a difficult policy dilemma. Source: Bloomberg

Investor anxiety has been heightened recently by the war in Ukraine and impending rate rises by the Federal Reserve. As such, we advise investors to maintain a calm stance during the crisis, diversify, and maintain exposure to long-term themes. Investors need to look beyond near-term news and gain exposure to industries benefiting from longer-term growth trends.

Wall Street’s main indexes climbed higher for a second consecutive week of gains, with the large-cap S&P 500 Index ending the week 1.8% in the green and the tech-heavy Nasdaq gaining 1.98%.

On Monday Federal Reserve (Fed) Chair Powell echoed a Federal Open Market Committee post-meeting statement, reiterating that interest rate hikes would continue until inflation is under control. If necessary, he said, the increases could be even higher than the quarter-percentage-point move approved at the meeting. Powell also addressed the Russian invasion of Ukraine, saying it is adding to supply chain and inflation pressures. This hawkish message spiked Treasury yields higher with the benchmark 10-year U.S. Treasury note jumping by roughly 35 basis points over the week reaching a high of 2.5% on Friday, investors are fearful the Fed may overplay its hand and end up slowing the economy.

It’s been just over a month since Russia invaded Ukraine on Feb. 24. It is estimated that up to a $100 billion worth of Ukrainian infrastructure, buildings and other physical assets have so far been destroyed. According to the UN, more than 10 million people have been displaced by the conflict while casualty figures are hard to estimate.

On Friday Moscow signalled it was scaling back its military ambitions and that the first phase of its military campaign in Ukraine is over, and it will now focus on the eastern Donbas region. “The combat capabilities of the Ukrainian armed forces have been substantially reduced, which allows us to concentrate our main efforts on achieving the main goal: the liberation of Donbas,” said Sergei Rudskoy, head of the General Staff’s main operations administration. However, by Saturday intense fighting was reported in a number of places suggesting there would be no swift let-up in the conflict. Ukraine’s President, Volodymyr Zelensky, said his troops had landed “powerful blows” on Russia and called on Moscow to recognise the need for serious peace talks.

The U.S. said it will work with international partners to supply the EU with an additional 15 billion cubic meters of liquified natural gas this year, with the aim of reducing the bloc’s dependence on Russia. It comes amid heightened concern that energy-importing countries continue to top up President Putin’s war chest.

Shares in Europe weakened amid the ongoing Russian invasion and the prospect of tighter monetary policy. In local currency terms, the pan-European STOXX Europe 50 Index ended 0.89% lower. In the UK, inflation hit a 30-year high in February driven by soaring household energy bills and petrol prices putting pressure on the Bank of England to continue raising interest rates. The consumer price index rose an annual rate of 6.2%—exceeding the median forecast of 6%.

Japan’s stock markets rose over the week, with the Nikkei 225 Index gaining 4.93%. Sentiment was boosted by expectations of further economic stimulus and reassurances from the Bank of Japan (BoJ) that it will maintain very accommodative monetary policies. Chinese markets fell amid delisting fears for U.S.-listed Chinese companies arising from a simmering bilateral dispute over auditing standards. For the week, the benchmark Shanghai Composite Index ended 1.2% in the red.

Market Moves of the Week:

South Africa is close to reaching a five-year target for new investment, President Cyril Ramaphosa said on Thursday at the country’s fourth Investment Conference in Sandton. The conference, which in part aims to sell foreign companies on South Africa’s potential, brought in a total of 332 billion rand ($22.83 billion), bringing the total of new investment since 2018 to 1.2 trillion rand.

On Wednesday night the President announced that restrictive COVID-19 regulations that have weighed on the nation’s struggling economy for two years would be removed, with the national state of disaster also to end soon. Major changes included the removal of a requirement to wear masks outdoors, though these would remain compulsory inside public buildings and on public transport and that travellers entering South Africa will need to show proof of vaccination or a negative PCR test not older than 72 hours.

The South African Reserve Bank (SARB) hiked its repo rate by 25 basis points to 4,25% during the week. The 3-2 (two members voting for 50bp hike) split among the MPC members came as a hawkish surprise. Headline CPI for 2022 was revised significantly upwards from 4.9% to 5.8% and there was an upward revision to the growth forecast from 1.7% to 2%. The MPC noted that it sees upside risks to its inflation forecast.

The JSE All-Share Index ended the week down 0.7%, with the financial (+1.57 %) and resources (+1.72%) sectors positive, against a weaker industrial sector (-4.00%) performance. By Friday close, the rand was trading at R14.53 to the U.S. Dollar.

Chart of the Week:

The Russian economy, and its citizens, have already been substantially hit by the significant sanctions imposed by the West and its international partners as well as a mass corporate exodus, with the Russian economy seen shrinking by 15% this year erasing 15 years of economic gains. The economic fallout is expected to be severe and long lasting.

Investor anxiety has been heightened recently by the war in Ukraine and impending rate rises by the Federal Reserve. As such, we advise investors to maintain a calm stance during the crisis, diversify, and maintain exposure to long-term themes. Investors need to look beyond near-term news and gain exposure to industries benefiting from longer-term growth trends.

Whilst volatility is likely to continue amid current market uncertainty over the coronavirus disease, our message to all investors remains the same – stay calm in making decisions that are aligned with your long-term goals, not current market conditions. Maintain realistic expectations, stay properly diversified across a variety of asset classes and make sure your financial plan supports your long-term goals, time horizon and tolerance for risk.

After two years of holding borrowing costs near zero, the Federal Reserve took the first step towards normalising its policy, hiking interest rates by 0.25% this week. Despite geopolitical uncertainties, the Fed signalled that it intends to press on with a series of rate hikes to fight inflation, which last month hit a 40-year high.

The hike is likely the first in a series to come, signalling that rate hikes are possible at all its six remaining meetings this year. Fed officials expect to raise rates as high as 2.8% by the end of this tightening campaign, depending on the trajectory of economic growth and inflation which remains data dependent.

Besides the Fed’s announcement, U.S. economic data seemed to have a limited impact this week, with markets more focused on falling oil prices, Russia temporarily avoiding a debt default, reports of negotiations of a possible Russia-Ukraine ceasefire and China vowing that it is not interested in getting involved in Russia’s war.

It was a volatile week for Chinese shares as investors weighed-up attractive valuations against a persistent regulatory overhang and concerns over Beijing’s ties with Russia. After a sharp sell-off early in the week, Chinese technology shares stagged a sharp rebound after Chinese officials made a strong push to stabilise battered financial markets, promising to ease its regulatory crackdown, support property and technology companies and stimulate the economy.

On Friday, Chinese leader Xi Jinping assured U.S. President Joe Biden that he didn’t want war in Ukraine, but that he doesn’t approve of sanctions, either. During the highly anticipated call, Biden warned Xi of “implications and consequences” should China move to provide support for Putin’s war.

China reported better-than-expected activity in the January-February period with help from policy easing. Industrial output grew 7.5% (4.0% expected) in the two months through February, compared with 4.3% in December. Retail sales rose 6.7% (3.0% expected), accelerating from 1.7% in December. Investment climbed 12.2% during the two-month period, better than the 5% estimate. Morgan Stanley however cut China’s GDP growth forecast for Q1 2022 to zero due to Covid and predicts Beijing will miss its annual target this year. The Wall Street bank lowered its 2022 forecast to a 5.1% gain for gross domestic product, below the Chinese leadership’s target of about 5.5%.

The Bank of England (BoE) hiked interest rates by 0.25% to 0.75%, in line with the market’s expectations. The central bank now expects inflation to reach 8% by the end of June, in part due to Russia’s invasion of Ukraine but acknowledged “there were risks on both sides of that judgment depending on how medium-term prospects evolved.” Markets interpreted the language to be more dovish in tone. U.K. unemployment improved to 3.9% in January, ahead of expectations and the previous reading of 4.1%.

Europe’s economic sentiment index plunged to -38.70 in March, from 48.60 in February, with concerns of a recession becoming more likely as the war in Ukraine and the sanctions against Russia are significantly dampening the economic outlook for the region.

Russia appears to have sidestepped a historic debt default, after the Kremlin said it ordered the $117 million in interest payments it owes on two dollar-denominated Eurobonds to be sent to investors. Russia had until the end of business on Wednesday to pay interest on two sovereign Eurobonds, failing which could have paved the way for Russia’s first foreign currency debt default in more than a century. Moscow’s willingness and ability to repay its international debt are however likely to be tested in the coming weeks.

Global equity markets rebounded sharply this week. In the U.S., the Dow Jones (+5.50%), S&P 500 (+6.21%) and Nasdaq (+8.18%) ended the week stronger. European and Asian shares also made strong gains, with the Euro Stoxx 50 (+5.85%), FTSE 100 (+3.48%) and Nikkei 225 (+6.62%) all positive, whilst the Shanghai Composite Index (-1.77%) was the market’s outlier.

Market Moves of the Week:

South Africa’s consumer confidence index fell to a level of -13.00 in the first quarter of 2022. This compares to a reading of -9.00 in the previous quarter. The latest reading remains well below the long-run average reading of +2 since 1994, signalling an increased caution of South Africans to spend.  Russia’s military invasion of Ukraine and the economic ramifications have shaken consumer confidence levels around the globe.

Eskom sees about a third of its coal-fired capacity being unavailable at any one time under a most likely scenario. This will require it to spend R20.9 billion on fuelling its open-cycle gas turbines in the 13 months through April next year. Eskom has forecast that its debt will rise to R416 billion by the end of this month.

JSE listed financial and industrial companies posted strong returns for the week. The JSE All-Share Index ended the week up +1.58%, with the financial (+5.08%) and industrial (+4.09%) sectors strongly positive, against a weaker resource sector (-2.53%) performance. By Friday close, the rand was trading at R14.97 to the U.S. Dollar.

Chart of the Week:

The Federal Reserve raised the fed funds rate for the first time in four years, but the 25-basis-points hike wasn’t the surprise. Rather, the hawkish element came in the accompanying “dot plot”. The Federal Reserve’s so-called dot plot, which the U.S. central bank uses to signal its outlook for the path of interest rates, showed that officials expect to raise the fed funds rate six more times this year, based on median projections. Source: Bloomberg.

Whilst volatility is likely to continue amid current market uncertainty over the coronavirus disease, our message to all investors remains the same – stay calm in making decisions that are aligned with your long-term goals, not current market conditions. Maintain realistic expectations, stay properly diversified across a variety of asset classes and make sure your financial plan supports your long-term goals, time horizon and tolerance for risk.

The Russian invasion of Ukraine continued this week, causing Western countries and their companies to implement harsher sanctions and embargoes on the Eastern European country. The United States, European Union and United Kingdom made plans this week to swiftly phase out imports of Russian energy products, which sent the oil price to $132 a barrel – a 14 year high – before settling above $110 (+44.54% YTD). The United States was the first to move on their plans, banning the import of Russian crude and other energy products while European nations, which are much more reliant on Russian energy imports, implemented less stringent measures. These moves, coupled with Western countries’ plans to cancel normal trading relations with Russia should put additional pressure on an already damaged Russian economy. On Friday, Russian President Vladimir Putin said there had been some progress in Moscow’s talks with Ukraine, but provided no details.

U.S. inflation came back into the spotlight this week, with February’s U.S. Consumer Price Index coming in at a fresh 40-year high of 7.9% year over year. Although this most recent print came in line with market expectations, Americans remain pessimistic about their financial future, with the University of Michigan’s preliminary gauge of consumer sentiment dropping more than expected in March to 59.7, a new decade low. However, the U.S. Federal Reserve is still on track to raise rates next week for the first time since December 2018, as it attempts to rein in inflation and improve economic stability. Sticking to inflation, the European Central Bank (ECB) has expressed concerns over the Ukraine situation and its potential impact on Euro-area inflation expectations. Christine Lagarde has stressed that the ECB would be “data dependent” when addressing the timing of the first rate increase, however, given the Russian-Ukraine conflict and its ability to drive up Euro-area inflation expectations, she announced that the ECB could end its asset purchase program in the third quarter, rather than at the end of the year.

China has been battling its biggest Covid-19 wave since the early days of the pandemic, for the first time in two years, China’s daily Covid cases are over 10,000. The spike in cases has forced China to lockdown Changchun, a northeastern city of nine million people. In other news, the U.S. Securities and Exchange Commission (SEC), on Thursday, identified five Chinese companies for potential delisting from U.S. exchanges for failing to meet audit requirements. The market reacted to the news, sending U.S.-listed Chinese stocks lower, however, on Friday, talks between Chinese and U.S. regulators over cooperation on audit and regulation were reportedly sounding more positive.

Major indices’ movements were mixed after another volatile week fuelled by the war in Eastern Europe. U.S. indices dropped this week as risk-off sentiment increased, consumer staples stocks underperformed as Coca-Cola, McDonalds, and other food and consumer products makers announced that they were suspending business in Russia. The S&P 500 index fell -2.92%, while the Dow (-1.99%) and Nasdaq (-3.53%) also ended the week in the red. Stocks in Europe rebounded after last week’s selloff, with the Euro Stoxx 50 up 3.68% and the FTSE 100 up 2.41%. Asian indexes fell, with the Nikkei 225 down -3.17% and Shanghai Composite down -4.00%. Brent crude managed a weekly decline, ending at $112.42 per barrel, while Gold (+0.91%) held up.   

Market Moves of the Week:

South African Gross Domestic Product (GDP) rebounded in Q4 of 2021 to +1.2% qoq, in line with consensus, up from -1.7% qoq in Q3 2021. Full-year (2021) GDP grew 4.9%, its fastest pace in 14 years, rebounding from a coronavirus-induced contraction the year before. This was the biggest increase since 2007, the annual expansion beat Bloomberg estimates, as well as the National Treasury’s forecast in its annual budget last month.

Cilo Cybin, South Africa’s first and only company with a license to grow, process, and pack cannabis, has just introduced its first oil-based cannabinoid product range, two months ahead of its listing on the JSE. Its products are said to be the country’s first CBD products to use a Self-Emulsifying Drug Delivery System (SEDDS), which increases efficacy by up to 10 times. 

On Tuesday, Eskom executives warned South Africans that Russia’s invasion of Ukraine will have a knock-on effect on Eskom and hit electricity supply in South Africa. The increase in oil and gas prices still needs to be accounted for by Eskom, but Chief financial officer Calib Cassim stated that the power utility cannot absorb these additional costs by itself. This comes at a time when Eskom is burning 9 million litres of diesel a day just to keep the lights on. The JSE ended the week lower (-1.40%) driven by a selloff in property and resources. Miners and energy underperformed, as the relentless rally in commodity prices showed signs of cooling. However, the Rand strengthened this week to end at USD/ZAR 15.05.

Chart of the Week:

The London Metal Exchange suspended trading in its nickel market after an unprecedented price spike, caused initially by investor concerns about supplies from Russia, left brokers struggling to pay margin calls against unprofitable short positions, in a massive squeeze that has embroiled the largest nickel producer as well as a major Chinese bank. Source: Bloomberg.

Investor anxiety has been heightened recently by the war in Ukraine and impending rate rises by the Federal Reserve. As such, we advise investors to maintain a calm stance during the crisis, diversify, and maintain exposure to long-term themes. Investors need to look beyond near-term news and gain exposure to industries benefiting from longer-term growth trends.

Our thoughts and prayers are with the victims of this aggression. As always, we appreciate your support and value your trust in StrategiQ Capital.

Whilst volatility is likely to continue amid current market uncertainty over the coronavirus disease, our message to all investors remains the same – stay calm in making decisions that are aligned with your long-term goals, not current market conditions. Maintain realistic expectations, stay properly diversified across a variety of asset classes and make sure your financial plan supports your long-term goals, time horizon and tolerance for risk.

On Wednesday, the United Nations General Assembly overwhelmingly voted to reprimand Russia for invading Ukraine and demanded that Moscow stop fighting and withdraw its military forces. The resolution was supported by 141 of the assembly’s 193 members, passed in a rare emergency session called by the U.N. Security Council while Ukrainian forces battled to defend the Russian invasion.

Russia was joined by Belarus, Eritrea, North Korea and Syria in voting against the resolution. Thirty-five members, including China, abstained. U.S. Ambassador to the United Nations Linda Thomas-Greenfield told the assembly to “Vote yes if you believe UN member states – including your own – have a right to sovereignty and territorial integrity. Vote yes if you believe Russia should be held to account for its actions”. Russia’s U.N. envoy, Vassily Nebenzia, denied Moscow was targeting civilians and repeated Russia’s assertion its action was a special military operation aimed at ending purported attacks on civilians in the self-declared Moscow-backed republics of Donetsk (DLR) and Luhansk (LPR) in eastern Ukraine.

The Russian invasion is focussed on “demilitarising” and overthrowing Ukraine’s government, whilst forcing the recognition of Crimea as part of the Russian Federation, as well as DPR/LPR within their administrative borders. The military action is aimed at destroying Ukraine’s infrastructure and causing widespread desperation compelling the Ukrainian government to concede to Putin’s terms (ultimately leaving the Ukraine in a powerless state).

On Friday Russia’s reckless assault to capture Europe’s largest nuclear plant (Zaporizhzhia in south-eastern Ukraine) triggered global condemnation. The attack set fire to a building in the complex, heightening fears around Russian tactics. Fortunately, the fire did not spread, and no nuclear reactors were damaged according to the International Atomic Energy Agency. The plant continues to be run by Ukrainian staff but under Russian control.

It is estimated that more than 1,5 million refugees have fled Ukraine, with Ukraine’s urban centres facing heavy bombing and Ukrainian president Zelensky’s office warning of a humanitarian catastrophe. A planned mass evacuation of civilians from Mariupol and Volnovakha turned into chaos on Saturday, as Russian forces continued to shell the city of Mariupol despite a brokered temporary ceasefire a few hours earlier.

President Zelensky has appealed to NATO to set up a no-fly zone over Ukraine, but NATO refused, warning that to do so could provoke widespread war in Europe with nuclear-armed Russia.

The Russian stock market was closed during week as the Rouble plunged on international currency markets despite the Russian Central Bank’s move to raise the policy rate from 9.5% to 20%.

The west has severed trading relationships with Vladimir Putin’s Russia on a scale thought unimaginable with seven Russian banks, including VTB, the second-largest, excluded from Belgian-based Swift, the bank messaging system that underpins global trade. Sanctions include the freezing of Russia’s central bank access to its foreign currency reserves ($630bn) held in dollars, euros and sterling. Index providers MSCI and FTSE Russell announced that it would remove Russian securities from its indices while at least 30 countries have banned Russian planes from their airspace. The UK government moved swiftly to blacklist a handful of Russian business people with links to Putin, while U.S. President Joe Biden followed announcing new penalties targeting Russian oligarchs with close ties to Putin.

A growing number of global companies have responded to the Russian invasion through sanctions, disinvestments and a suspension of operations with the likes of Visa, Mastercard, Apple, Microsoft and Samsung pausing sales in Russia (to name a few), Nike preventing Russian customers from buying online, carmaker Ford suspending its joint venture in Russia, Adidas (Europe’s largest sportswear manufacturer) suspending its partnership with the Russian Football Union, while The Walt Disney Company, said it was pausing its release of films in Russia.

Russia’s largest foreign investor, BP, led the way with its announcement that it would exit its 20% stake in state controlled Rosneft, a move that could cut its global oil and gas production by a third, while Shell will end its joint ventures with Russian state energy firm Gazprom.

The sports world has also reacted to the invasion with Formula 1 cancelling September’s Russian Grand Prix, the relocation of the UEFA Champions League final which was planned to be held in St. Petersburg to Paris and numerous global sports teams standing in unison against Russia’s war on Ukraine.

Switching to U.S. interest rates Federal Reserve Chair Jerome Powell told Congress this week that the central bank is on track to raise interest rates this month, saying that he was inclined to stick with a quarter-point increase in the federal funds rate in March. But Russia’s invasion of Ukraine means the Fed will “move carefully,” he said.

On Friday the US Bureau of Labor Statistics reported that the US economy added 678,000 jobs last month, far ahead of expectations, as activity continued to rebound. The unemployment rate also edged down to 3.8%, indicating a robust labour market recovery.

Markets remained volatile for the week, with the U.S. benchmark S&P 500 off 1.3%, while the Nasdaq lost 2.8%. Shares in Europe also fell sharply, as investors weighed the possible implications of Russia’s invasion of Ukraine. In local currency terms, the pan-European STOXX Europe 50 Index gave back over 10% of its value, while the UK’s FTSE 100 Index also pulled back 6.7% for the week.

Japan’s stock markets also registered losses for the week, with the Nikkei 225 Index falling 1.85% with Prime Minister Fumio Kishida’s government imposing more sanctions on Russia in coordination with Western nations. In China, the Shanghai Composite Index dipped 0.1% as the War and weaker domestic economic data weighed on investor sentiment.

Market Moves of the Week:

The latest Zondo Commission report was released during the week, which found evidence against Minister of Mineral Resources and Energy Gwede Mantashe, raising serious ethical and legal questions for the ANC and its leaders. The report recommends that the Minister should be investigated further, adding that there was a reasonable prospect this would uncover a corruption case against him.

The JSE All-Share Index retreated the most in six weeks on Friday as stocks fell broadly, with Naspers and Prosus leading the losses on the local bourse. The JSE All-Share managed to end the week positively, gaining 0.71% led higher by the strong performance of the resource sector (+9.71%). By Friday close, the rand was trading weaker on the week at R15.33/$.

Chart of the Week:

Oil prices eased from their highs on Thursday amid reports that Western nations are close to a deal with Iran over its nuclear program but by Friday prices headed for their biggest weekly surge as sanctions continued to disrupt Russian oil supply, the world’s second-biggest exporter. Benchmark Brent Crude rose as high as $119.84 a barrel, its highest since 2012. Russia ships more than 7 million barrels per day (bpd), with about half going to Europe, accounting for 12% of the world’s total crude exports in 2020.

Whilst volatility is likely to continue amid current market uncertainty over the coronavirus disease, our message to all investors remains the same – stay calm in making decisions that are aligned with your long-term goals, not current market conditions. Maintain realistic expectations, stay properly diversified across a variety of asset classes and make sure your financial plan supports your long-term goals, time horizon and tolerance for risk.