Animal Spirits

Global markets ended their best month in two years strongly on Friday with the JSE gaining 0.47% to 68,934 points, having strengthened 4.09% for the month, according to Infront data, while the top 40 was up 0.49% — having added 3.93% in July.
In the US the Dow added 6.7% for the month, the S&P 9.1% and the Nasdaq, 12.3%.
The market has been fuelled by some better than expected big tech earnings, which came after a 75 basis point interest rate hike from the Federal Reserve on Wednesday, as widely expected. However, the Fed’s tone was less hawkish, with chair Jerome Powell indicating that the central bank could slow the pace of its rate hikes, saying its future moves will be data-dependent.
Asian shares were sluggish this morning as we kick off the new month though, as disappointing Chinese economic data fed doubts Wall Street's rally could be sustained, while the dollar continued its retreat on the yen as speculators were forced out of suddenly unprofitable short positions.
China's official measure of factory activity contracted in July as fresh virus flare-ups weighed on demand, and the Caixin PMI also missed forecasts
This doesn’t bode well for the raft of other PMIs due this week, including the influential U.S. ISM survey, while the July payrolls report on Friday should also show a further slowdown.
At the same time U.S. data out Friday showed stubbornly high inflation and wages growth, while central banks in the UK, Australia and India are all expected to hike again this week.

Let’s find out what the animal spirits are telling us with Chris Holdsworth, Chief Investment Strategist at Investec Wealth and Investment