Global equities experienced another mixed week, on the back of healthy corporate earnings out of the US, a solid April jobs report and the Fed reiterating its patient approach to setting rates.
The U.S. economy added 263,000 jobs in April, which was higher than the expected consensus of 190,000 jobs, along with steady wage growth — evidence that the labour market can continue to support growth without fuelling inflation. The unemployment rate fell to 3.6% in April, the lowest level since December 1969. Wage growth held steady, advancing at a 3.2% rate compared with a year ago, the same pace as in March.
On Thursday the Fed held rates steady while citing an improving economy, hopes for cuts were dashed by Powell at his post-meeting press conference as he stressed the Federal Open Market Committee’s (“FOMC”) view that recent declines in inflation were due to transitory factors and that the committee expects inflation to rise back toward its 2% target.
In Europe, the eurozone economy grew more quickly than expected in the first quarter as gross domestic product expanded 1.2% year over year. Additionally, unemployment fell to 7.7%, the lowest level since the global financial crisis. British prime minister Theresa May remains in negotiations with the opposition Labour Party in order to reach agreement on a way forward for Brexit.
Billionaire investor Warren Buffett on Friday disclosed that Berkshire Hathaway Inc. had purchased shares of the e-commerce giant Amazon. Buffett, the world’s most famous value investor, said all investing is focused on value, effectively “putting out money now to get more later on.”
Market Moves of the Week:
South Africa’s rand firmed on Friday as a strong U.S. jobs report weighed on the dollar, although many investors stayed on the sidelines with national elections less than a week away.
Although political analysts say a victory for the governing African National Congress (ANC) is all-but assured, the party has been struggling to reverse dwindling support. Equity-market investors will be watching for the victory margin to give them the chance to judge whether President Cyril Ramaphosa will be able to drive growth-boosting economic reforms in Africa’s most-industrialized economy.
The JSE All Share Index ended the week up 0.75%. The financial (+3.13%) and industrial (+0.96%) sectors led the gains against a weaker performance from the resource sector (-1.29%).
In our chart of the week we focus on three recent opinion polls showing differing support for the major political parties.
Chart of the Week:
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Have a great week!
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