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World markets continue to make new highs

There’s nervousness in the market ahead of the mid-term budget speech – David Shapiro on Wednesday’s market moves.

NASTASSIA ARENDSE:  Good evening and welcome to the SAfm Market Update with Moneyweb. My name is Nastassia Arendse.

I’m joined in the studio by David Shapiro from Sasfin to take us through the day’s market performance. David, always great having you in the studio.

DAVID SHAPIRO:  It’s going to take a whole half hour to go through what happened on the market today. You’ve got lot of notes.

NASTASSIA ARENDSE:  Okay, let’s try. What happened today?

DAVID SHAPIRO:  It was good. It was a very good day on world markets, and we continued to make new highs. I was looking at the Dow Jones. It’s at an all-time high. Remember, 30 years ago the market crashed. It’s not going to happen this time. In fact, we are going to keep making records. But what’s interesting about the Dow Jones is that IBM was up 9%, and IBM hasn’t increased its sales for five years, so a big reaction there. That just underpinned markets.

European markets were very strong, I think on the belief that the ECB, the European Central Bank, will continue with its stimulus.

Then the dollar strengthened on views of a heightened [bets of an] increase in rates in December. That hurt the rand. But overall it had a supportive effect, although miners were down a bit today. One can expect it. Copper prices had run hard, iron-ore prices had recovered, with a bit of stabilising now.

But taking the market down was Anglo, and Anglo fell quite sharply on diamond sales. Their eighth sight was far, far lower than everyone had anticipated, and so Anglo came down, Billiton down.

But all the action was on the industrial market, where AB InBev was very strong. And with the lower rand in international markets, we had some very good gains there.

But the feature – we’ve seen a turnaround in some of the UK property stocks which came down heavily with Brexit, and for the first time in a long time I saw a broker – not a local broker, actually UK – Capco up 4.25%, Hammerson up 2%, Intu also up. That was just one of the features.

But retail stocks were also pretty good. Construction stocks are also doing reasonably well.

So overall a nice day on the market.

NASTASSIA ARENDSE:  That’s it?

DAVID SHAPIRO:  I just summarised everything. What it did do this morning, I woke up and I listened to Mr Xi Jinping talk for three hours and 20 minutes in Chinese. I didn’t understand a word he said [chuckling].

NASTASSIA ARENDSE:  The layout of his roadmap for 2050. Anything stick out to you?

DAVID SHAPIRO:  I won’t be around by then, so I’m not sure whether he will be successful or not.

NASTASSIA ARENDSE:  I will be around.

DAVID SHAPIRO:  But I think what comes out and why I brought it up, is that markets did respond to it. Chinese markets responded fairly positively. I suppose it’s also going to give some kind of underpin to gains that we see on the markets. He didn’t say anything negative. It’s very hard to interpret what it all means, and I mean that in a genuine way. As hard as I try to read about it I’m not sure what it all means, so I watch for signs in markets and the markets seemed to respond fairly optimistically to what he had to say.

NASTASSIA ARENDSE:  It’s midweek, Wednesday. Is there any other key piece of information or company news that you are looking out for?

DAVID SHAPIRO:  I think we are all starting to prepare ourselves for the mid-term budget. There is a bit of nervousness around it and what it’s going to mean. What might save us is a weaker rand – save markets – and also a focus on what’s happening overseas. It’s going to be a tough review for us, and we expect revenue collections to be down quite significantly. We are all wondering where he’s going to get the money to save SAA and other state-owned organisations. That will probably start to occupy our minds now.

But generally overseas markets are doing well and that should set the sentiment and the trend for markets going forward. I still think we are in the early throes of a very strong bull market. When I say “strong”, it could be the last leg. But just hold on for a bit, don’t get rid of your stocks quite yet.

NASTASSIA ARENDSE:  Thanks so much , David, for your time.

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