January 2019 market overview

US markets soared at the start of the new year, with the MSCI World Index up almost 8% for January! This was the best year start in over 30 years, causing chatter amongst bear market speculators. The US delegation that visited China served to quell trade war fears and gave investors an initial feeling of hope regarding an extension of the current truce. The Fed kept interest rates stable, suggesting that the rates are reaching a more neutral ground. Oil markets and commodities did well overall, recovering from the downward trend towards the end of 2018. US banks boosted the markets near mid-month, with Goldman Sachs shares rising 10%. As employees returned to work following the end of the shut down, Apple and Facebook reported positive earnings data and the price of tech stocks generally increased globally.

European markets entered the month boldly until drops in the automobile sector and a decrease of over 4% in retail sales for the month casued decreases in Germany’s DAX to filter across the Eurozone. UK markets also started well, but quickly subsided amongst concerns over Jaquar Land Rover cutting jobs and Brexit talks looming overhead with no clear decisions forthcoming. The UK markets went on largely unperturbed as parliament rejected Theresa May’s deal once again. The UK government survived a vote of no confidence and the Pound managed a slight rally.

Asian markets, including the Nikkei and Kospi, danced along to the global market tune. But with Chinese exports down 4.5% and imports down 7.5% for December, Asian markets slipped from their positive tracks. Chinese GDP results came in at their lowest point in over 25 years, but an announcement from authorities on economic intervention via tax cuts was well received, and the Hang Seng and Shanghai Composite Index lifted again. Asian markets declined at month end though, as investors await the start of new US-China trade talks.

Local markets were aided by the positive global market sentiment, and the ALSI increased almost 3% on the back of positive returns from the big four banks, with financial services returning 7% overall. Commodities also supported positive market returns as Kumba Iron Ore returned an outstanding 20% after a rise in iron ore prices and lowered oil costs. In contrast, big retailers like Shoprite fared poorly, loosing over 12% for the month. Nonetheless, announcements that the SA Reserve Bank (SARB) will remain independent and that SARB kept the repo rate unchanged at 6.75% served for a positive start to the year.

During January 2019 the FTSE/JSE All Share Index (ALSI) gained 2.81% on a total return basis, while bonds gained 2.90%. The SA Listed Property Index (SAPY) gained 9.18% in January, and cash returned 0.60%. Internationally, the MSCI World Index gained 7.78% in Dollar terms and the MSCI Emerging Markets Index ($) gained 8.76%. This January the Rand gained 8.40% against the greenback and 8% to the Euro.

Over the past 12 months, the ALSI and listed property returned -6.06% and 9.18% respectively. The ALBI returned 8.79% and cash 7.25%. Internationally, the MSCI World Index returned -6.54% in Dollars.

Click here to view previous market review – December 2018