IC Markets’ Post

The JSE saw its biggest gain in over a month, rising by 1.25% to 83 032 points as global markets firmed. Investors assessed economic data ahead of the Federal Reserve's Wednesday meeting, with US retail sales unexpectedly rising by 0.10% in August, beating forecasts of a 0.20% decline, indicating robust consumer spending. Read what else happened in the markets yesterday: https://lnkd.in/dAqup5Hq

- US retail sales and industrial production should continue to weaken. - Solid S&P Q2 earnings must support markets. Tomorrow's US retail sales and industrial production on Wednesday should confirm a further gradual slowdown in the US economy. It is therefore important that US earnings do not disappoint in order for the US equity markets to remain well supported. However, market expectations for US earnings growth in the second quarter are quite high at around 10%. It will therefore not be easy for companies to fulfil expectations. In the eurozone, the markets are focussing on the ECB this week. Once again, market expectations of ECB President Lagarde are very high. The markets are expecting signals as to what will happen after the first interest rate cut. We expect the statements to remain vague and data-dependent. The European markets are unlikely to be happy about this. What does this mean for portfolio allocation? The US allocation remains the main component of the portfolio, but should be very well diversified to manage volatility during the reporting season. If earnings and/or macro data disappoint, long-term rates should continue to decline. Interest rate sensitive sectors, such as technology, consumer discretionary and real estate, should be stabilised. In the eurozone, indices and companies with high international exposure should continue to perform better. The Eurostoxx 50 is a good example. Outside the eurozone, we remain positive for Switzerland and the UK.

- US retail sales and industrial production should continue to weaken. - Solid S&P Q2 earnings must support markets. Tomorrow's US retail sales and industrial production on Wednesday should confirm a further gradual slowdown in the US economy. It is therefore important that US earnings do not disappoint in order for the US equity markets to remain well supported. However, market expectations for US earnings growth in the second quarter are quite high at around 10%. It will therefore not be easy for companies to fulfil expectations. In the eurozone, the markets are focussing on the ECB this week. Once again, market expectations of ECB President Lagarde are very high. The markets are expecting signals as to what will happen after the first interest rate cut. We expect the statements to remain vague and data-dependent. The European markets are unlikely to be happy about this. What does this mean for portfolio allocation? The US allocation remains the main component of the portfolio, but should be very well diversified to manage volatility during the reporting season. If earnings and/or macro data disappoint, long-term rates should continue to decline. Interest rate sensitive sectors, such as technology, consumer discretionary and real estate, should be stabilised. In the eurozone, indices and companies with high international exposure should continue to perform better. The Eurostoxx 50 is a good example. Outside the eurozone, we remain positive for Switzerland and the UK.

Markets are evidently reevaluating their anticipations regarding potential Fed rate cuts in 2024. In today's presentation, we will examine the retail sales report for December and delve into its implications for both the Federal Reserve and the markets.

Treasuries Fall in Countdown to US Retail Sales: As the anticipation builds for the latest US retail sales data, the world’s biggest bond market is showing signs of strain. Treasury yields have taken a dip, and the June rally has lost some of its momentum. In New York, the manufacturing sector contracted, but the decline was less severe than expected. Prices are also cooling, which might provide some relief to those worried about inflation. Yet, the focus remains on the upcoming retail sales report, which is expected to offer a clearer picture of consumer spending and economic health. Adding to the uncertainty, several Federal Reserve speakers are slated to share their views this week. Their commentary will be closely watched for hints about the future direction of interest rates. With so much at stake, market participants are treading carefully, trying to gauge the Fed's next moves. Key Takeaways: Treasury Yields Decline: The bond market's June rally has weakened as traders brace for new economic data. Stock Market Volatility: Stocks are wavering amid the uncertain economic outlook. Manufacturing Insights: New York manufacturing shrinks, but less than forecast, with cooling prices. Federal Reserve Focus: Multiple Fed speakers will provide crucial insights on the rate outlook this week. Stay informed and ahead of the market trends by keeping an eye on these developments. The retail sales data and Fed insights could significantly impact your investment strategy. #FederalReserve #RetailSales #Finance #InvestmentStrategy #MarketUpdate #Inflation #InterestRates #BondMarket

The key economic report for last Tuesday, retail sales, was forecast to show a 0.2% increase in May. As I told my friends at MarketWatch, a 0.2% gain would represent a return to normal after a flat April. A better-than-expected result could suggest either a payback from a weak April or support the view that the consumer is still spending. Read more here: https://lnkd.in/ecf_KnjT

US retail sales growth impacts bond market and Federal Reserve rate cut expectations, signaling a robust economy amidst changing interest rate strategies. #RetailSales #FederalReserve #EconomicGrowth #BondMarket #InterestRates #StockMarket #Investing

Major equity markets ended the week negative as investors began to scale back their rate cut expectations. Early in the week, inflation data for January showed a 0.3% increase on a monthly basis, above expectations. On Thursday, retail sales data showed consumers pulled back spending in January by a larger amount than expected, a potential development to watch moving forward. Next week’s calendar will be shortened with the markets being closed in observance of President’s Day; however, investors will pay attention to the minutes of the FOMC’s January meeting.

☑ A mixed week for stocks ☑ Retail sales impact on 3Q GDP ☑ The latest election news Get the details in this week's Market Report from the Hancock Whitney Asset Management Team. Learn more at https://lnkd.in/egwXMAT8