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Africa Market and Lombard Fund News

Oil drops to five-week low

04 Nov 2016

Asia: markets mixed with some safe haven buying into the large capitalization shares, TSMC, Samsung and China Mobile. Overnight US stocks matched a 20 yr record 8 down days in a row..GBP jumps on court ruling on Brexit and Parliament needs to get decide, this could delay Article 50 but PM says “no”. Bond market steady and SPX was steady until the DoJ announced they may investigate Generic drug makers. US large caps leading lower with AAPL and AMZN lower along with FB -5% on results. After market LVS +3% and GoPro -20%...Tonight Payrolls with mkt exp 173K. No-one looking to take much of a view before the Election. Nikkei -1.6% re-opens after holiday and Index plays catch up and weaker USDJPY 103.07 hurting Exporters. Index support at 16,900, current level. Toyota and Mazda -4% and Healthcare weakest following US moves. Materials outperform on weaker USD. Shanghai +0.1% flirts with 3140 breakout. China Unicom parent +5% on reform talk. Just 2 weeks to go to SZ connect and Brokers higher. Bloomberg says may announce actual start date this weekend, but presume Nov 21st..HK -0.1% and Index holds 22,700 support. China Mobile +1% after chart hits Demark 13 Sell exhaustion today Coal higher despite of mainland cuts some price RMB10/ton. Great Wall/Geely pair starting to work. Semis pause with high flying SMIC -2%...Taiwan, flat and Steve Pelayo cuts Vanguard -4% to Reduce, every which way he tweaks his model he cannot justify current 3.9x PB and 19x PE vs previous peak at 3x book and 16x PE..TSMC +0.2% but still feels heavy with foreign selling picking up. Korea -0.2% with Internet Naver -3%..HSBC upgrades Kepco to Buy after share px -22%, Lee Yeonjung has called this name well as says trading 0.45x PB risk reward looks attractive Currencies weaker vs USD. Gold $1300 and Oil $44.78 Best Sectors Telcom, Coal and Materials. Worst Sectors Autos, Internet and Property

U.S Equities: Its tough to get a real handle on where the election stands as Trump has been pressing the FOX story that the FBI is close to an indictment against the Clinton Foundation, while Hillary and the main stream media are suggesting that the FBI Director Comey committed a major breach of protocol by re-opening the email case Although Clinton has a 47.3 - 45.1 advantage, it does appear that although Hillary hasn't lost many supporters, late deciders appear to be breaking for Trump.  On top of that the latest polls have Trump in the lead in NH (was leaning Clinton) and much closer in Virginia.  Market Strategists all seem to agree that a Trump Victory would lead to lower taxes/higher deficits/higher inflation/higher yields.  So, todays continued steepening of the curve {USYC2YC Index GPO <go>}, suggests that the market is pricing in a higher probability of a Trump Victory.  The stock market didn’t do a whole lot.  The S&P Futures traded in a 1 point range for 2 hours this morning, took a leg down, traded in another 1 point range for 2 hours, and then took another leg down.  Poor Numbers from Facebook (-5%) hurt the Tech Sector while Healthcare (-1%) was weighed down by the Generics.  The DOJ announced late this afternoon that they will be charging generic companies with price collusion on up to 2 dozen Drugs.  Teva -11%, Mylan -8%, Endo -20%, Valeant -9%, Allegan -5%.  GOLD (1303, +.5%) remained firm throughout the day.  


Commodities:  Oil dropped to a five-week low as the global supply glut appears to be expanding. Zinc rebounded with other industrial metals and touched a five-year high amid signs of tight supplies. Bullion are trading near 4-week highs as the tightening US election race spurs haven demand.

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