The Dow Jones Industrial Average rallied over 600 points as job growth surged to 312,000 during the month of December, beating economists’ expectations of 176,000 non-farm payrolls added. In addition to jobs added, wages grew 3.2% from the previous year and 0.4% higher than November. The unemployment rate rose to 3.9% from 3.7% as new entrants were added to the labour force. Robust job creation and wage gains should bode well for continued strength in consumer spending and should go a long way in alleviating fears of an impending recession. Additionally, the decline in fuel prices should further support consumption.

Federal Reserve chair Jerome Powell offered an upbeat assessment of the US economy following the robust jobs report. Mr Powell said the Fed would take a “patient” approach to monetary policy tightening. Global equity markets rallied sharply on the upbeat assessment. There was also further optimism that scheduled trade talks set for Monday between U.S. and Chinese officials will avert a full-blown trade war.

Jair Bolsonaro, the first right-of-center president since Brazil ended its military dictatorship in the mid-1980s, was sworn into office this week, vowing to fight corruption, open up markets and carry out structural reforms. Investors have been receptive with Brazilian equities up strongly year to date.

Market Moves of the Week:

Locally, South Africa’s rand firmed to a two-week best on Friday as emerging markets were boosted by increased expectations of the United States central bank having fewer rate hikes rates this year. At the close the rand was firmer (3.26% over the week), ending the week at R13.96 to the U.S. Dollar.

Stocks also continued to regain some of the losses they had endured in the first few days of the new year, with the broader all-share index up over 1% on Friday to end the week at 52,203 points. Industrials were stronger with the retail sector leading the gains, Mr Price gained 2.22% to R244, TFG 3.35% to R166.70, and Truworths 4.33% to R88.92.

Brent crude climbed 3.91% to $57.84.

Bonds were firmer, with the yield on the benchmark R186 government bond last bid at 8.8%, its lowest since mid-August.

Chart of the Week:

Source: Factset. SA index multiples (12 month forward consensus) are close to 6 year lows (including or excluding Naspers) and not far off aggregate Emerging Market multiples (excluding Naspers).

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Have a great week!

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any Strategiq product. Strategiq Capital is an authorised financial services provider (FSP 46624).