US markets edged up on Friday and the Dow Jones continued one of its longest winning streaks to date by closing higher for the 11th straight session. The market rally that is inspired by US President Trump has run its course in other global markets, including the UK, which was dragged down by losses in banking- and mining sector stocks. The Pound fell against other currencies as Prime Minister, Theresa May, prepares for an independence referendum by Scotland next month.
South African News
SA markets fell sharply on Friday, led by losses in mining sector stocks while food retailers managed to swim against the current by closing higher. The Rand looked to move stronger on Friday, but local politics are preventing the currency from a positive breakout. Brian Molefe will be sworn in as an MP and could be taking up a position in Treasury. The market is concerned that this could see current Finance Minister, Pravin Gordhan, deployed to a different post.
In a few recent trade ideas, we’ve highlighted the positive impact that the rain and slowing inflation will have on input costs in certain companies and industries. Astral Foods [ARL] is another company that we feel will benefit from the reduced maize and soya prices. Our buy recommendation is further strengthened by optimism that the SA government will do more to protect local industry and that there will be reduced imports from the EU due to bird flu. We believe there is upside to Astral and particularly if the potential protectionist policies were to materialise.
The Day Ahead
There is potential market moving data expected from the US today and this week also sees several Fed members speak, which is certainly going to give markets a clearer picture of the Fed’s rate expectations. This could all be overshadowed by Donald Trump’s address to Congress tomorrow and knowing Trump, there is always room for a few surprises. Expect cautious trade over the next two days before Trump speaks.
Key Results Out Today
EU Economic sentiment
US Durable goods orders
US Pending home sales
Quote of the day
“Think left and think right and think low and think high. Oh, the thinks you can think up if only you try.”