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Market Commentary and Charts of Interest [25 May 2020] – UnumCapital
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Market Commentary and Charts of Interest [25 May 2020]

Market Commentary and Charts of Interest [25 May 2020]

JSE Closes Lower

The JSE closed lower on Friday as US-China which included the establishment of new laws in Hong Kong weighed on risk assets. For the session: All Share (-1.71%), Top 40 (1.69%), Resources 10 (-1.29%), Platinum (-4.27%), Life Assurance (-2.93%), Telecoms (-2.58%), Healthcare (-2.62%), Banks (+0.09%). The Rand reached an intraday low of 17.87 versus the US Dollar before settling at 17.58 by the close of the US equity trading session. (Lester Davids)

US Stocks Close Mixed, Book Strong Weekly Gains

Wall Street closed mixed on Friday as investors gauged US-China tensions amid ongoing uncertainty about the pace of economic recovery and the easing of restrictions. President Donald Trump warned on Thursday that he would react strongly to China’s plan for a national security law in Hong Kong, raising concerns over the trade dealĀ“s Phase One continuity. Overnight, China released a bill to impose new national security measures on Hong Kong to prevent further anti-government protests. The Dow Jones lost 9 points or less than 0.1% to 24,465. In contrast, the S&P 500 climbed 7 points or 0.2% to 2,955. The Nasdaq added 40 points or 0.4% to 9,325. During the week, the Dow gained 3.3% and posted its biggest weekly advance since April 9th, boosted by optimism over an eventual COVID-19 vaccine and the easing of coronavirus-related restrictions. The S&P 500 the Nasdaq also rose more than 3%.

European Shares Mostly Higher on Stimulus Hopes

European equities closed slightly higher in another volatile session on Friday, with the DAX 30 adding 0.1% to end at 11,074, after the accounts of the ECB’s April meeting showed that policymakers are “fully prepared” to expand the bank’s bond buying scheme as soon as June to support the Eurozone economy, which is seen contracting by a tenth this year due to the coronavirus crisis. Early losses were dragged by fears that tensions between the US and China could escalate further following Beijing’s latest move to impose a new security law on Hong Kong. On a weekly basis, the DAX 30 jumped 5.8%, all thanks to massive gains on Monday.

UK Stocks Lower on US-China Tensions, Weak Data

The FTSE 100 lost 22 points or 0.4% to end at 5,993 on Friday, as global market sentiment was hit hard by fears of escalating tensions between the world’s largest economies after Beijing announced it would impose a new security law on Hong Kong and President Trump warned that Washington would react “very strongly” if that happened. News that China refrained from setting a 2020 GDP growth target also worried investors about its economic outlook. Meanwhile, economic data showed Britain’s public debt hit 100% of GDP in April, its highest in nearly 60 years, while retail sales slumped at a record pace as the coronavirus crisis hit the economy. For the week, the FTSE 100 gained 3.3%.

Oil Drops on Recovery Concerns, US-China Tensions

US WTI crude futures lost 3.5% to trade around $32.7 a barrel on Friday amid concerns about China’s economic outlook after the world’s second-biggest economy refrained from setting a 2020 GDP growth target for the first time. In addition, investors worry that tensions between Beijing and Washington could escalate further after the former announced it would impose a new national security legislation on Hong Kong following last year’s pro-democracy unrest.

(via: Trading Economics)


Charts Of Interest

Cash Mountain (via JPM)

First outflow since mid FEB

Cash levels remain elevated on retail platforms, and money fund balances of $4.7tr allocations also elevated. Suggests capacity for more cash to come into the market. Interestingly, margin balances are still down. Domestic equity ETF and MF outflowing in aggregate over the past few months; but flows could be coming into the market via single stocks. (via JPM)

Cash Mountain

Winner Takes All: Stark differences in 1Q results (via JPM)


Hedge funds cut net exposure by less than in previous drawdowns (via Goldman Sachs)

Hedge funds cut net exposure by less than in previous drawdowns

Net USD positioning (via Haver)

Net USD positioning

Worst “themes” of the 2020, strange bed-fellows, Do not be a concentrated HF darling, do not be interest rate sensitive or a divvie payer or have weak balance sheet…(via Goldman Sachs)

Worst "themes" of the 2020

ECB B.S EUR 5.5 trillion, Up almost EUR 1 trillion since mid March (via Blokland)

ECB B.S EUR 5.5 trillion

Lester Davids

Trading Desk Analyst

Unum Capital (Pty) Ltd
An Authorised Financial Services Provider (FSP 564)


T: +27 (0)21 201 7270             W:  www.unum.co.za             E: lester@unum.co.za


Lester Davids

Lester joined Unum Capital in July 2016 and is a Trading Desk Analyst focusing on local (JSE) and global multi-asset class technical strategy and research which includes idea generation.

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