Gold, silver prices dip after strong payrolls dent rate cut bets
Market Scorecard
US markets pulled off a strong finish on Friday, turning around an early dip and ending with a solid rally. The S&P 500 rose 5.7% last week, and the tech-heavy Nasdaq Composite ended the week up 7.3%.
Over the weekend, it appeared that US tariffs on the import of electronics will be lifted, so we should be in for a strong rally today, but who knows? We won't count our chickens before they hatch.
In company news, earnings season kicked off with JPMorgan up 4.0% after beating expectations on stock-trading revenue in the first quarter. Their CEO, Jamie Dimo,n is probably the most influential businessman in the world, and he sounded cautious about the US economy.
In summary, the JSE All-share was up 0.42%, the S&P 500 rose 1.81%, and the Nasdaq was 2.06% higher. Ok then.
Bright's Banter
After spooking markets with a wave of heavy-handed tariffs, Trump has backpedaled and further excluded a bunch of tech gear like smartphones, laptops, semis, and solar panels from the eye-watering 145% tariff hike on Chinese imports. The move is being spun as a strategic push to give companies time to shift manufacturing to the US, but let's be honest, it probably has more to do with the $640 billion Apple (NASDAQ:AAPL) selloff and tech stocks bleeding out.
Investors like us can breathe a big sigh of relief. Apple, which still makes the majority of its products in China, was staring down a pricing disaster that could've made iPhones unaffordable luxuries. Same for Nvidia (NASDAQ:NVDA) and other chipmakers who rely heavily on Chinese supply chains; tariffs on semis would've wrecked margins and disrupted the flow of components.
Now, with exemptions in place (applied retrospectively to early April), markets have some much-needed clarity. It's a win for us, the Apple-Nvidia crowd, and possibly a signal that the White House is paying attention to Wall Street's reaction.
Having said the above, let's wait to see how this all pans out.
Michael's Musings
Wow, what an eventful few days. Last week was the best week for the market in two years, and yet it still didn't recover all the losses of the period 10 days ago, when the massive "reciprocal" tariffs (aka taxes) were announced. The market still has to do some more lifting to get back to its February levels. Share prices don't like uncertainty, and there has been way too much of that around recently.
Thankfully for Apple, taxes on electronics have been lifted, as mentioned above. Last week, Apple flew six planes loads of iPhones from India to the US in an attempt to get ahead of the tariffs. That's roughly 600 tons, which is estimated to be around 1.5 million phones. It sounds like a scenario out of a war zone, where there is an emergency airlift of vital equipment.
Some European car manufacturers had paused their cars from crossing US customs until there was more certainty on tariffs. If the other so-called "reciprocal" tariffs hadn't been delayed, I wonder how long the freeze on EU car imports would have lasted.
Spare a thought for logistics companies who have been scrambling to keep up to date with all the tariff changes. At times, different White House staff were contradicting each other on the applicable levels for specific countries.
Global supply chains are complicated and can't change overnight. All the whipsawing in tariff decisions and the lack of planning is a problem. It simply is not how you set international trade policy.
One Thing, From Paul
The last month has been very tough for those of us invested in US markets, but we've also had some spectacular up days.
That's not unusual. According to Ned Davis Research, in the last 20 years, 42% of the S&P 500's strongest days occurred during bear markets.
Another 36% of the market's best days took place in the first two months of a bull market, before it was clear that the recovery had begun.
In other words, the best way to weather a downturn is to stay fully invested because it's simply impossible to time the market's recovery.
This point is even more valid now, because this selloff was not caused by war, bad weather, a pandemic or inflation. It was caused by misguided policies, and as we've now seen, such steps can be reversed.
Signing Off
Asian markets opened higher this morning, riding the wave of relief from the US decision to exclude iPhones and other electronics from tariffs. Apple-related suppliers got a boost, lifting broader indices across the region.
In local company news, Vukile's (JO:VKEJ) European expansion continues: its subsidiary Castellana Properties (via 70%-owned Caminho Propicio) is buying the Forum Madeira shopping centre in Funchal, Portugal for EUR63.3 million. Elsewhere, Gemfields is turning to shareholders for a $30 million (R579m) cash lifeline, proposing a rights issue to plug a funding gap caused by the ongoing civil unrest in Mozambique.
US equity futures are firmly in the green pre-market. The Rand is trading at around R19.09 to the US Dollar.
Have a good week, It's a short one with Easter coming up, so is next week and the week after that!