US inflation data has been dominating the global market narrative. July data was released yesterday and showed a 5.4% annual increase including food and energy. Excluding these more volatile components results in an increase of 4.3% vs. the prior year. This was in line with or slightly below expectations, which caused treasury yields and the USD to fall.
That was good news for gold shares, which continue to confuse me. Gold is theoretically an inflation hedge, but the net impact on the USD and yields of slower-than-expected inflation seems to help the gold shares.
The Fed is still beating the drum that inflation is transitory. I'm not so convinced. For now, I'm just happy to have seen a rally in my gold shares that have been an ongoing pain for me.
In local news, Distell has renewed its cautionary announcement yet again. Heineken is still deciding whether to make an offer for the company. The first cautionary announcement was issued on 18th May, so this has been going on for months. I guess the cocktail of alcohol bans and widespread looting doesn't help with quick decision-making.
There are four important articles this morning and I struggled to choose a lead story. In the end, I've gone with Steinhoff, as you don't see a single-day gain of 23% terribly often. There is still a ton of risk in the company but at least it looks one step closer to achieving a settlement offer.
Other stories include AdvTech's excellent earnings release, the details behind Nedbank's interim result and an encouraging trading statement from Master Drilling that sent the share price up more than 10%.
A new episode of Magic Markets will be released later today. If you haven't done so yet, make sure you listen to episode 37 from last week. We welcomed Satrix portfolio manager Siyabulela Nomoyi onto the show to respond to our criticism of the Inclusion and Diversity ETF. You can listen to it here.
Here's to another fun day in the markets!
The Finance Ghost
