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The market overview serves as a comprehensive snapshot of the financial markets, providing a summary of various asset classes, sectors, and indices. Its primary purpose is to showcase the performance of different financial instruments over a specific period. https://www.unum.capital/research-disclaimer

The Week That Was US equities had a varied performance on Friday, as traders and investors grappled with fresh inflation data and deliberated on the future direction of the US Fed. The Dow Jones concluded the day with a gain of 105 points, buoyed by upward movements in Chevron (+2%) and Merck & Co (+1.8%). Meanwhile, the S&P 500 experienced a marginal decline of 0.1%, and the Nasdaq faced a more substantial setback of nearly 0.7%. This decline was primarily driven by a sell-off in shares of AMD (-2.4%), Nvidia (-3.6%), and Micron (-1.6%). Inflation indicators came into focus as producer prices, which reflect the costs paid by wholesalers for raw materials, climbed by 0.3% for the month. This increase heightened expectations that the Fed might need to maintain elevated interest rates for an extended period. Notably, the prior day saw both headline and core consumer inflation figures falling short of forecasts, but remaining well above the Fed's targeted 2% mark. Concurrently, Mary Daly, President of the San Francisco Federal Reserve, emphasised that the central bank still has tasks ahead to rein in inflation. For the week, the Dow experienced a minor dip of 0.1%, while the S&P 500 encountered a 0.7% loss, and the Nasdaq underwent a more pronounced decline of 1.8%. This marked the second consecutive week of losses for the Nasdaq. On Friday, the JSE FTSE All Share Index experienced a decline of approximately 1%, ultimately closing at 76 980 points. This movement was driven by market participants' attention being divided between monitoring the trajectory of interest rates, staying informed about corporate updates. The Western Cape chapter of South Africa’s taxi union concluded an eight-day strike. This protest was sparked by opposition to a new municipal traffic regulation in Cape Town. This regulation dictates the impoundment of vehicles instead of imposing fines on drivers who fail to display proper registration plates. Unfortunately, this development led to a surge in violence within the city. In the realm of corporations, the market saw significant declines in Motus (-4.5%), RCL (-3.9%), and Prosus (-3.7%), emerging as the top losers. The week concluded with the JSE's performance remaining nearly unchanged, reflecting a relatively stable overall outcome. The Week Ahead In the US, all eyes are on the FOMC minutes as traders and investors eagerly seek insights into the Fed's intentions for the rest of the year. Notably, Chair Powell emphasised last month that decisions would be approached on a meeting-by-meeting basis. Market sentiments show an 89% likelihood of the Fed retaining interest rates in September, while a potential quarter-point rise in November has a 32% probability. As the US earnings season winds down, companies including Home Depot, Cisco, Walmart, Deere & Co, Target, and Applied Materials are gearing up to release their Q2 results. Forecasts suggest a brisk 0.4% rise in retail sales and a bounce-back in industrial production after June's slump. In the UK, a bustling economic calendar awaits, featuring unemployment stats, inflation figures, and retail sales data. It's anticipated that July's inflation rate will drop to 6.8%, a record low since February 2022, while retail sales might experience a downturn after three successive months of growth. The unemployment rate for Q2 is predicted to remain stable at 4%. In the Eurozone, the spotlight is on the Q2 GDP's second estimate and the definitive reading of July’s inflation. Concurrently, German investor confidence is projected to stay relatively consistent. Shifting the focus to Asia, China's economic reports for July, featuring industrial production, retail sales, and unemployment, will further illustrate its tepid economic resurgence after an array of underwhelming prior data. Fixed investment and property price statistics are also in the limelight, especially with growing concerns over the fiscal stability of real estate developers. Japan is set to spotlight its robust Q2 GDP growth, as well as data on July’s inflation and trade balance. Key Themes for the Week Ahead Federal Reserve Meeting Minutes In anticipation of the Fed's annual gathering in Jackson Hole, Wyoming, towards the end of this month, traders and investors are shifting their focus to the minutes of the central bank's July policy meeting, scheduled for Wednesday. After implementing a 25 bps rate increase last month and keeping the possibility of another hike in September open, the released minutes will offer insights into market participants' appetite for further rate hikes, even though the market is leaning towards a September pause. Recent data indicated moderate increases in US consumer and producer prices for July, suggesting a trend of easing inflationary pressures. The US central bank has gradually raised interest rates by 5.25 percentage points since March 2022 to align with its 2% inflation target. US Economic Data The upcoming week includes the release of July retail sales data on Tuesday, expected to display a demand uptick at the beginning of Q3 following a less-than-anticipated increase in June. Other data is likely to signal ongoing struggles in the manufacturing sector, with the Empire State and Philly Fed manufacturing indexes predicted to remain negative. Reports on building permits and housing starts, set for Wednesday, are anticipated to present a more positive picture of the housing sector. Additionally, the weekly initial jobless claims report on Thursday is expected to show a slight decrease after a larger-than-expected increase the previous week. Retail Earnings As the second-quarter US earnings season draws to a close, S&P 500 results demonstrate a mixed scenario. While companies are surpassing analysts' profit expectations at the highest rate in nearly two years, revenue beats have declined to levels not seen since early 2020. This week, major US retailers, including Home Depot, Target, and Walmart, will unveil their results, providing crucial insights into the state of consumer spending— a key driver of the US economy. Traders and investors attention will centre around retailers' commentary on how inflation is impacting profit margins, given that elevated prices are eroding households' purchasing power. Furthermore, it's an essential week for Chinese firms listed in the US. Tech behemoth Tencent, video streaming service Bilibili, e-commerce giant JD.com, and electric vehicle producer XPeng are all slated for updates. Additionally, updates from the South-east Asian company, Sea, are anticipated. In the UK, spotlighted firms include insurance giants Aviva, Admiral Group, and Legal & General. They're joined by retirement service provider Just Group, infrastructure developer Balfour Beatty, and gaming entities 888 Holdings and Rank Group. Chinese Economic Data China's post-Covid economic rebound has faltered in recent months after a robust first quarter, weighed down by weak domestic and international demand. Beijing is scheduled to release data on Tuesday, encompassing retail sales, industrial production, and fixed asset investment, which is expected to indicate only modest gains. The previous week's data revealed China's consumer prices experienced their first yearly decline in over two years in July, intensifying pressure on policymakers to take further actions to bolster the economy. Despite promises of supportive measures from authorities, the lack of detailed information has left investors disappointed. Oil Price Increases Oil prices climbed on Friday after the International Energy Agency forecasted record global demand coupled with tightening supplies, leading to the seventh consecutive week of price gains—the longest streak since 2022. With June seeing an all-time demand peak of 103 million barrels per day, the (International Energy Agency) IEA projected the potential for a fresh peak this month. Concurrently, output reductions from Saudi Arabia and Russia set the stage for a substantial inventory decline through the remainder of 2023, potentially propelling oil prices even higher according to the IEA. South Africa The Congress of the People (Cope) has alleged that the ANC shields its members who are implicated in criminal activities. This statement was in response to the special leniency afforded to former president Jacob Zuma. Zuma faced arrest in 2021 for not adhering to a mandate to testify at the commission investigating claims of state manipulation. Merely two months into his 15-month sentence, he was given medical parole. Yet, the Constitutional Court declared the parole was granted in violation of the law. While Zuma was reincarcerated on Friday, he was set free in under two hours. The escalating frequency of load-shedding in 2023 poses the potential of an R1.6 trillion economic setback for South Africa, surpassing last year's losses by R400 billion, as highlighted by Electricity Minister Kgosientsho Ramokgopa during a recent public lecture at the University of Pretoria. Economic Calendar In the upcoming economic calendar for this week, several significant events are scheduled to take place. source: investing.com https://www.unum.capital/research-disclaimer

Pre-Market, Monday 14 August 2023 To download the note, click on the link below:

Pre-Market, Monday 14 August 2023 To download the note, click on the link below:

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Friday, 11 August 2023 at 09h35 For an enlarged view, click on the arrows in the top right corner of the image.

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The market overview serves as a comprehensive snapshot of the financial markets, providing a summary of various asset classes, sectors, and indices. Its primary purpose is to showcase the performance of different financial instruments over a specific period. https://www.unum.capital/research-disclaimer

Introduction When it comes to investing in shares, it's crucial to be armed with the right tools and knowledge to make informed decisions. One of the most important metrics that investors use to assess the risk and return potential of equities is beta. Beta is a numerical value that measures the sensitivity of a share's price movements relative to changes in the broader market. We will delve into the concept of beta and explore its significance for share investors. What is Beta? Beta, often denoted as "β," is a statistical measure used in finance to quantify the volatility or systematic risk of a share compared to the overall market. The market, in this context, is typically represented by an index, such as the Top 40 index. The beta value indicates how much a share's price is expected to move concerning the market's movements. It helps investors understand how closely the share's performance is tied to the market's fluctuations. Interpreting Beta Values β = 1: If a share has a beta of 1, it moves in perfect correlation with the market. Its price tends to rise or fall by the same percentage as the market index. Such shares are considered market-neutral in terms of volatility. β < 1: A share with a beta below 1 is less volatile than the market. In other words, it is expected to have smaller price swings than the overall market. These shares are often referred to as defensive equities and are perceived to offer a more stable investment option. β > 1: A share with a beta above 1 is more volatile than the market. It tends to experience larger price movements, both upward and downward, compared to the market index. These shares are considered aggressive or growth-oriented investments. Risk and Return Relationship Beta plays a crucial role in determining the risk and return profile of a share. Typically, higher beta shares offer the potential for greater returns but also come with higher risk. Conversely, lower beta shares may have more modest returns but tend to be less risky and more stable during market downturns. For example, if Share A has a beta of 1.5, and the market (represented by an index) increases by 10%, Share A might be expected to rise by 15% (1.5 times the market return). Conversely, if the market falls by 10%, Share A could be anticipated to decline by 15%. How to Use Beta in Investment Decisions Diversification: Beta can help investors build a diversified portfolio. By combining shares with different beta values, investors can offset the risk of high-beta shares with the stability of low-beta shares. Risk Management: Beta assists in assessing the level of risk an investor is willing to undertake. Conservative investors might opt for low-beta shares, while those seeking higher returns might favour high-beta shares. Market Timing: Understanding beta can help investors make better decisions about when to buy or sell a share. During a bullish market, high-beta shares may outperform, while during a bearish market, low-beta shares may hold up better. Limitations of Beta While beta is a valuable metric, it does have some limitations: Historical Data: Beta is based on historical price movements, and the past may not necessarily predict future performance accurately. Market Conditions: Beta assumes that market conditions will remain constant, which is often not the case. Single-factor Metric: Beta considers only market-related risk and does not account for other factors like company-specific events or changes in industry dynamics. Conclusion Beta is a useful tool for investors to gauge the volatility and risk associated with a particular share relative to the overall market. It aids in constructing a well-balanced portfolio and managing risk according to individual investment goals and risk tolerance. However, beta should not be the sole factor in investment decisions, as it's essential to consider other aspects of a company's fundamentals and the broader economic environment to make well-informed investment choices. As with any investment analysis, it's prudent to conduct thorough research. Top 40 share beta and selected markets: The heatmap displayed below presents the constituents of the Top 40 index alongside selected major markets. This dynamic heatmap is updated daily, providing valuable insights. For added convenience, you can download the corresponding data as an Excel file. Stay informed of the latest trends and changes in the market through this user-friendly visualisation. Download the Excel file here: https://www.unum.capital/research-disclaimer

Introduction In the world of share trading, understanding correlation is vital for making informed investment decisions and managing risk effectively. Correlation plays a crucial role in assessing how different shares or assets move in relation to each other, providing insights into portfolio diversification, risk management, and potential investment opportunities. We will explore the concept of correlation in share trading, its importance, and how traders and investors can leverage this knowledge to improve their strategies. What is Correlation in Share Trading? In share trading, correlation refers to the statistical relationship between the price movements of two or more shares or assets. When two shares have a positive correlation, they tend to move in the same direction – when one share's price increases, the other share's price also increases. On the other hand, a negative correlation indicates that two shares tend to move in opposite directions – when one share's price increases, the other share's price decreases. Finally, if two shares have a correlation close to zero, it suggests that their price movements are not significantly related. Measuring Correlation in Share Trading The most common method of measuring correlation between two shares is by using the Pearson correlation coefficient, just like in general statistics. The correlation coefficient ranges from -1 to 1, with the same interpretation as before: r = 1 indicates a perfect positive correlation, where the two shares move in complete harmony. r = -1 indicates a perfect negative correlation, where the two shares move in opposite directions. r ≈ 0 indicates little to no correlation, suggesting that the two shares have independent price movements. Importance of Correlation in Share Trading Understanding the correlation between different shares is crucial for several reasons: Diversification: Correlation helps traders identify assets that have low or negative correlations with each other. Diversifying a portfolio with assets that are not highly correlated can help reduce overall risk. When some assets decrease in value, others might increase, which can mitigate losses. Risk Management: High correlations among shares can increase the overall risk in a portfolio. If all shares in a portfolio are positively correlated, they are more likely to experience simultaneous declines during market downturns. By knowing the correlation between holdings, traders can optimise their portfolios to manage risk more effectively. Identifying Investment Opportunities: Traders can use correlation analysis to identify potential investment opportunities. For example, if they notice a positive correlation between two shares, they might consider one as a proxy for the other. If the correlation is negative, they may see a hedging opportunity to protect against price declines. Sector Analysis: Correlation analysis can help traders understand the broader movements within specific sectors or industries. For example, in a technology-heavy sector, many shares might be positively correlated, and understanding this can influence investment decisions within that sector. Limitations of Correlation in Share Trading While correlation is a valuable tool, it has its limitations: Changing Market Conditions: Correlations between shares can change over time due to shifts in market dynamics, economic conditions, or company-specific events. Traders need to monitor correlations regularly and be prepared for them to evolve. Limited to Linear Relationships: Correlation measures linear relationships between variables. Some shares may have non-linear relationships, making it important to consider other forms of analysis alongside correlation. Causation Concerns: As always, it's essential to remember that correlation does not imply causation. Just because two shares are correlated does not necessarily mean that one share causes the price movement of the other. Conclusion In share trading, understanding correlation is a powerful tool for making informed decisions, managing risk, and optimising investment portfolios. By analysing the relationship between different shares, traders can diversify their portfolios effectively, identify hedging opportunities, and navigate changing market conditions more intelligently. However, correlation should always be used in combination with other forms of analysis, and traders must be cautious about drawing causal conclusions solely based on correlation. With a solid understanding of correlation, traders can navigate the dynamic world of share trading with greater confidence and success. Top 40 share correlation and selected markets The heatmap displayed below presents the constituents of the Top 40 index alongside selected major markets. This dynamic heatmap is updated daily, providing valuable insights. For added convenience, you can download the corresponding data as an Excel file. Stay informed of the latest trends and changes in the market through this user-friendly visualisation. Download the Excel file here: https://www.unum.capital/research-disclaimer