A rough guide

Understanding the market is an important factor when one needs to make investment decisions. Here is a rough guide, for the current environment.

According to the Efficient Group: If the currency strengthens by around 1% and the oil price increases by 3.24% then the market will reach a new record high gaining 0.85%.

Resource stocks responded to the currency, or more likely to the strike in the gold sector, as the platinum price dropped, leaving platinum stocks stronger.

Sasol were supported by the higher oil price gaining 2.49%, followed by rand hedges such as Kumba (1.95%) and SABMiller (1.26%). The good results released by Old Mutual (3.06%) yesterday buoyed the financial stocks while Sanlam’s announcement was well received by the market.

The sharp increase in the oil price had the expected result in the US pushing the markets into the red, while bad news from Cisco Systems (-7.00%) lead the Nasdaq’s slump. European markets were pulled higher by the oil stocks while good results and take over talks were further supporting factors.

The markets in the Far East are trading higher, with the Nikkei reaching 4 year highs. The strong trading is driven by expectations that the Japanese economy might report good expansion. Predicting the market seems to be easy these days, no matter what await a new record high.