Global: Stretched valuations?
US equities continued to improve over the month, as fresh economic data provided additional momentum to the market which began the year on a very positive note. Inflation continued to rise on the back of higher energy prices, and retail sales were indicative of a robust economy. Employment numbers also remained healthy with the unemployment number remaining unaltered at 4.1%.
Domestic: Improved political and economic sentiment
A perceived reduction in political risk, and a renewed sense of positive global economic growth, resulted in a risk on environment prevailing on the JSE. Equity prices in December had already started to reflect this more positive sentiment. However, an inhibiting factor in January was the strength of the Rand which traded at its highest level against the USD in two and a half years.
The resulting outcome was that the prices of the dual listed stocks that form a large part of the JSE All-Share Index came under pressure. It was for this reason that the All Share Index returned a paltry 0.10% and the Top40 0.20% both in total return terms.