Unum Capital: PMIs Sees Stocks Tumble

Unum Capital: PMIs Sees Stocks Tumble

On Tuesday, the JSE managed to cap further short term losses as a substantially weaker Rand supported shares which earn the majority of their revenues in foreign currency. Here, the likes of Prosus (+1.37%), Mondi (+1.76%), Sasol (+3.53%) and Kumba Iron ore (+4.59%) supported the All Share Index which closed higher by 120 points or 0.22% for the session. On the downside, Pepkor, Shoprite and MTN fell by 3.15%, 1.65% and 1.35% respectively. Driving the decline in currency on the day was the Absa Manufacturing PMI which fell to a decade low reading of 41.3 versus a previous reading of 45.7 and forecasts of 43. In addition, a stronger Dollar was one of the external factors which contrinuted to the Rand’s weakness on the day. Late in the afternoon, the release of the US ISM Manufacturing PMI came in below forecast with a reading of 47.8 versus expectations of 50.1 which saw risk asset lose ground and safe-havens find temporary support as markets digested the data and considered the path for the US and global economy. This morning the Rand trades at 15.31 to the US Dollar.
European stock markets reversed early gains and closed deeply in the red  on Tuesday, amid global growth concerns and after flash estimates from  Eurostat showed Eurozone annual inflation fell to 0.9% in September,  well below the ECB target inflation of just below 2%. In Europe, latest  Markit Economics data showed Eurozone, Germany, Italy and Spain factory  activity contracted more than expected in September while the UK  manufacturing PMI came in below the neutral 50.0 mark for the fifth  straight month. Overseas, fresh ISM data showed US manufacturing sector  shrank the most in over a decade. The DAX 30 lost 164 points, or 1.3% to  12,264; the FTSE 100 retreated 48 points, or 0.7% to 7,360; the CAC 40  slipped 80 points, or 1.4% to 5,598; the IBEX 35 dropped 79 points, or  0.9% to 9,166; and the FTSE MIB went down 180 points, or 0.8% to 21,928.. – TradingEconomics.com
Wall Street closed lower on Tuesday, as the ISM manufacturing index in  the US fell to 47.8 in September, well below consensus of 50.1 and a new  low since June 2009. Manufacturers cited the China-US trade conflict as  weighing on sales. Also, violent protests in Hong Kong and a bearish  manufacturing reading ini Europe took a toll. On the corporate side,  broker Charles Schwab announced that it is ending commissions for online  trading in US stocks, ETFs and options, sending its own shares and  those of rivals TD Ameritrade and E-Trade sharply down, as the sector  faces increasing competition from commission-less platforms Robinhood,  Interactive Brokers and JP Morgan Chase. The Dow Jones lost 344 points  or 1.3%. The S&P 500 retreated 37 points or 1.2%. The Nasdaq shed 91  points or 1.1%.. – TradingEconomics.com
   

ABSA Manufacturing PMI

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Company News
Murray and Roberts: ATON has elected not to extend the long-stop date for the Offer, being Monday, 30 September 2019 (“Long Stop Date”) and that accordingly the Offer has lapsed in accordance with its terms. JSE SENS
United Parcel Service Inc on Tuesday said it won the U.S. government’s first full approval to operate a drone airline, which gave it a lead in the nascent U.S. drone delivery business over rivals Amazon.com Inc and Alphabet Inc. – Reuters
Coca-Cola Co. plans to start selling its Coke-branded energy drinks in the U.S. in January after clearing a legal hurdle with Monster Beverage Corp. this summer.  Energy-drink maker Monster, which counts Coca-Cola as a distribution partner and a significant shareholder, had sought to block the sale of the energy drinks in the U.S. citing a noncompete agreement. In July Coca-Cola won an arbitration claim against Monster, clearing the way for the soda giant to sell the branded energy drink in the U.S. Coca-Cola said Tuesday that its U.S. energy-drink offering would include cherry as an exclusive flavor. A zero-calorie version of both the regular and cherry flavors will also be available, company officials said, adding the zero-calorie options have been driving much of the recent growth. – MarketScreener.com

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Technical Levels
US Dollar Index: Key level to hold is 97.37. Rejection off channel resistance following US Manufacturing PMI.
US Dollar / South African Rand: Second target of 15.27 has been reached and exceeded. Currently trading at prior breakdown level. A short term reversal would see the prior support of 15.12 being tested.

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SA 10 Year Bond: Downward trend line going back to October 2018 has been breached, followed by a backtest and a continuation of the move higher.

JSE Top 40 Index: The index is holding onto the ‘minor support” zone of around 48809. Major and year to date support is at the 48300 level which may also offer an opportunity to take a buy/long position (currently monitoring). On the upside, resistance is at the 49700 level which is where the 200-day moving average is currently situated. US and Asian equities lower may see index go on to test support around 48300.

Prosus: On Monday we flagged R1100 as a level of interest, yesterday we saw the price break out of the falling wedge formation on massive volume (4.7m shares) and value traded of R5.1bn.


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Please chat to the Unum Capital Trading Desk to take advantage of any trading opportunities.
All the best,
Lester Davids
Unum Capital Trading Desk Analyst
e-mail: clientservices@unum.co.za
Tel: 011 384 2923

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