Markets this week are dominated by the scandals currently rocking US President Donald Trump —including the firing of FBI Director Comey and allegations that he leaked highly classified information to the Russians. President Trump’s unpredictable behaviour and low approval rating mean that he’ll be the major market mover for some time to come.
- The MSCI World total return is up 9.1% for 2017 in US dollars and 6.5% in rand. Since last year February, the index has gained 29% in dollars, excluding dividends.
- The MSCI Emerging Markets Total Return Index has increased by 16.6% in US dollars since the beginning of 2017, including dividends. It has grown 13.9% in rand, hitting a rand record high.
- Last week, President Donald Trump fired FBI Director James Comey, amid concerns over this dismissal, which was motivated by Comey’s investigation into Russian involvement in the recent presidential election.
- In the US, IT stocks have grown 14.8%, consumer discretionary 10.4%, healthcare 9.2% and the S&P500 Index have returned 6.9%. Energy has declined by 10.2%.
- Consumer prices in the US rose by 2.2% year-on-year in April, slightly behind the 2.4% increase in March.
- European markets spiked after the French presidential election, indicating that markets were pricing in a high level of political risk.
- The Eurostoxx 600 Index rose 0.63% while the CAC40 and the DAX closed the week 0.05% and 0.62% higher respectively.
- In China, year-on-year exports in April increased by 8%, below the expectation of 10.4%. Imports for April were 11.9% higher, below the expectation of 18%
- Chinese inflation for April came in at 1.2% year-on-year, higher than both the March figure of 1.1% and market expectations of 0.9%. Prices of non-food items rose at a faster pace.
- Brain Molefe was reinstated as CEO of Eskom last week, this is after his resignation in November last year. This raises questions around the governance at State Owned Enterprises, which could adversely influence South Africa’s sovereign rating in the near future.
- Last week, the JSE All Share Total Return Index, hit a record high (assisted by the gain in the Naspers share price, up 35% in 2017) returning 8.2% in 2017 so far.
- British American Tobacco, Anheuser, Mediclinic and Richemont have also performed very well in 2017.
- Mining production for March 2017 exceeded expectations of 4.7%, coming in at 15.5% year-on-year.
- Manufacturing also did well in March, gaining 0.3% year-on-year, recovering from -3.6% in February, Markets expected a fall of 2.4%.
Source: Dynasty, Stanlib, Efficient Select, Prescient, Moneyweb & Bloomberg Markets etc.