Daily Solutions – 17 July 2017

JOHANNESBURG – The JSE closed firmer on Friday, ending a week of gains, as retailers and banks were buoyed by the firmer rand and resources rebounded after the government backtracked on the implementation of the controversial 2017 Mining Charter. The all share closed higher on all five days of the week, for the first time since the week ended April 28, as a stronger rand supported interest-rate sensitive sectors such as banks and retailers, while losses among miners were capped by firmer commodity prices. Industrials were buoyed by Naspers, with rand hedges suffering an indifferent week. The government’s backtracking on the Mining Charter was confirmed by a statement from the Chamber of Mines, saying that Mineral Resources Minister Mosebenzi Zwane had given a written undertaking not to implement or apply the provisions of the 2017 reviewed Mining Charter, pending judgment in the urgent interdict application brought by the chamber. “The minister has furthermore undertaken that, in the event of any breach of the above undertaking, the chamber can set the urgent interdict application down for hearing on 48 hours’ notice to the minister,” the chamber said in a statement. The rand firmed more than 1% against the dollar on Friday, as disappointing US inflation data caused the dollar to lose ground and US treasury yields to fall in risk-on trade, which benefited emerging markets. The US consumer price index (CPI) remained unchanged at 1.6% in June.

US MARKETS – Stocks rose to record levels on Friday as earnings season kicked off. The S&P climbed 0.6 percent to close at 2,459.27, setting intraday and closing records. The index’s previous intraday record was 2,453.82, which was set June 19. The Dow Jones industrial average closed 84.65 points higher at 21,637.74, a record. The 30-stock index also notched an intraday record. The Nasdaq composite outperformed the Dow and the S&P, rising 0.6 percent to close at 6,312.47. The major indexes have overcome several hurdles recently to climb back to record territory. First, tech stocks showed signs of weakness to close out the first half of the year. Tech has been the best-performing sector this year, rising about 20 percent.

EUROPEAN MARKETS – European stock markets closed mixed Friday as investors digested earnings reports from Wall Street banks and monitored developments from a meeting between the French and U.S. presidents. The pan-European Stoxx 600 ended the day slightly higher, with sectors in mixed territory. Friday marked the official start of U.S. earning season, which drove major European bourses down from a positive morning to close in the red. The FTSE was unchanged for the week, while the German Dax and the French CAC were up by around a percent. Wall Street moved higher following the release of data from major banks Citigroup, JPMorgan Chase and Wells Fargo. The three banks beat market expectations, however, the banking sector in Europe slumped on the news.

ASIAN MARKETS – Asian markets closed mostly higher in Friday trade as investors digested the second day of Federal Reserve Chair Janet Yellen’s testimony ahead of earnings season. Japan’s Nikkei 225 gained 0.09 percent, or 19.05 points, to close at 20,118.86. The Kospi advanced 0.21 percent, or 5.14 points, to end at 2,414.63, making gains for a second-straight day after closing at a record level in the last session. Greater China markets were a mixed picture. Hong Kong’s Hang Seng Index edged up 0.16 percent to hold near two-year highs. Mainland markets recorded declines. The Shanghai Composite rose 0.13 percent, or 4.1473 points, to close at 3,222.3105 and the Shenzhen Composite shed 0.407 percent, or 7.6865 points, to finish at 1,881.0110.

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Source: Investment Solutions