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Africa Market and Lombard Fund News

Financials, Energy and Discretionary worst sectors

17 Nov 2016

Asia: Asian markets mixed on small moves as turnover in the US shrinks. Overnight deja vu with Financials again lower on Broker downgrades. Telcos higher and FANGs bounces for the second days with AAPL +2.7% on talk of 3 models of the iPhone8. Dark commodities lower following China pm selloff. TED spread widens 1st time in a week and VIX +3%. Currencies in countries where foreigners are overweight in bonds continue lower Turkey, Malaysia and South Africa. Aftermarket CSCO -4% on sales forecast suggest Tech spending will fall. Yellen testimony later tonight. EEM ETF showed outflows halted. Nikkei -0.1% recovers early losses and USDJPY back above 109.00 from a low of 108.60. Japanese PM Abe will meet Trump today. Topix Bank index sees 1st pullback since the election. Utilities lead. Shanghai -0.3% and 4 more cities added to Property price watch list. China's holding of USTs falls to the lowest in 4 years. RMB fixing 6.8692. Authorities will try to curb recent commodity spikes. IPO accelerating and SZ connect imminent will likely see rotation to ChiNext and Shenzhen market from SHCOMP. HK flat, off opening lows. Tencent -0.5% rallies off lows. HK Property leads after SHK +1% Matriach adds to holdings. SZ connect announcement like waiting for Godot, but interest in upside Tencent and HK EX continues. Taiwan +0.15 and foreigners selling lighter. ASE/SPIL merger gets the nod from Taipei, just waiting for the US. Delta -1% and touches and holds 200dma , HSBC top pick. Korea -0.1% with Financials lower. Posco -1% and DFS stores OPM -30% putting pressure on Retailers. Kia close to Demark 13 Sell exhaustion if w36,000. Currencies mixed to weaker. Gold $1227 and Oil $45.57 Best Sectors Shipping, Utilities and AAPL related. Worst Sectors Financials, Energy and Discretionary.

U.S Equities:  The S&P's traded in a tight range for most the day.  Banks led losses as the S&P 500 Index swung back to declines, while Apple Inc. paced a rally in technology companies. The Treasury yield curve flattened, with 30-year bonds outperforming shorter-dated debt as traders moved toward a consensus that the Federal Reserve will raise interest rates next month. The dollar returned to a nine-month high versus major peers. Crude slipped even as Russia’s oil minister expressed optimism that OPEC would reach a deal, with government data showing an increase in American supplies.  The S&P 500 fell 0.2% to 2,176.94, after closing Tuesday within 0.5% of an all-time high set in August. The Dow halted its longest rally in almost four months, slipping 0.3%, while the Nasdaq Composite Index advanced 0.4%. Consumer Stocks (+.55%) got a lift from Target (+6.5%) as it beat and raised guidance.  TJ Maxx (+4%) and Fossil (+8.4%) jumped in sympathy.   Tech (+.9%) had another good day as Apple (+2.75%) calmed investors’ concerns that they will be forced to move production from China due to Trumps policies.  A modest flattening of the Yield Curve and tempered expectations for amendments to Dodd Frank resulted in some profit taking in the Financials (-1.42%).  Commodities were lower across the board as the Dollar continues to move higher.  Market Volumes (7.3b) were good, but well below levels we saw last week

Commodities: Crude held losses near $45 a barrel after U.S. stockpiles rose and as OPEC meets with Russia for informal talks without oil ministers from Iran and Iraq, the two countries that pose the biggest hurdle to an output deal. Chinese investor interest in copper is cooling as prices decline from a two-year high in Shanghai and volumes shrink. Futures in China have fallen 6% this week, while LME prices slid 2%.

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