EB Market Update – November 2018

Global – A Trump / Xi reconciliation?

In November, US equities began on a very positive note with economic data continuing to impress. US payrolls added an above expectation 250,000 jobs, with the unemployment rate remaining steady at 3.7% and the hourly wage gaining 3.1% year-on-year. The midterm election results were as expected, with the Democrats gaining control of Congress – hence the results had little impact on the overall market.

In spite of the positive economic data suggesting that the Federal Reserve might be inclined to put a foot on the brake, Chairman Powell surprised market pundits by adopting a more dovish approach and suggesting that additional interest rate hikes might be limited.

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Domestic: 2019 – hopefully a new dawn?

The local market struggled to find direction with the US/China trade spat continuing to weigh heavily on emerging markets as a whole. Coupled to this was a rising oil price as well as concern over the movement of US interest rates. Developments at all SOEs, in particular Eskom, also contributed to negative investor sentiment. The FTSE/JSE All share returned a negative -3.3% for the month, followed by the FTSE/JSE Top40 Index with a negative -3.2%..

Declining global demand for raw materials saw resource counters come under selling pressure, with the Resources Index delivering a negative -11.5%. Industrial and financial counters remained flat. The Bond market continued to attract foreign investment, with the BEASSA All Bond Index returning a positive 3.9%. Inflation linked bonds returned a negative -1.1%.

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