Morning Gossip - Trump Rally Extends Wall Street Records
The market rally fuelled by President Trump’s anticipated ta policy has seen Wall Street indexes close at record highs for the third straight session. It was a global risk-on environment with UK markets rising on gains in the mining sector while riskier Emerging Market currencies appreciated. Positive data from China showed the country’s producer prices rising at the fastest pace since 2011, boosting reflation. The rally seems to have lost steam today as traders start taking profits on Asian markets this morning, which may well extend towards other global markets.
South African News
SA markets traded firmer in line with most other global market indexes. Financials and resources provided the most support while positive market sentiment placed further pressure on gold sector stocks. The Rand traded firmer against developed market currencies, but has failed to find the momentum to push higher. If you are looking for a Valentines gift that won’t break the budget, then chocolates might not be the worst idea. Cocoa futures (prices) have fallen to the lowest level since 2008 on the back of large supplies from Latin America and West Africa.
Sasol’s valuation has come down to attractive levels again in the last couple of weeks. The share price reached a high of around R430 for the year and is now trading at R388 and a PE ratio of under 10. Oil prices have stabilized above $50 a barrel since OPEC and other crude-producing nations agreed last year to cut production by about 1.8 million barrels a day. There is also an earnings boost expected for Sasol’s Organics business in surging alcohol/surfactant prices in the US which could ultimately prop up the share price in the near term. At current trading levels, it could be a good time pick up Sasol for the long term.
The Day Ahead
The Trump rally looks to have run out of steam today and the market is likely waiting for more details before jumping into gear again. The focus for the next two days will be Fed Chair, Janet Yellen’s, congressional testimony that may contain clues about the Fed’s pace of rate hikes this year.
Key Results Out Today
EU Revised GDP
US Yellen Congressional testimony
Quote of the day
“The heart has its reasons of which reason knows nothing.”
- Blaise Pascal