Global equities remain poor performers. As we noted yesterday, none of the world's major equity indices remains above support. Accordingly, we expect on-going weakness and remain bears. The chart above shows that the MSCI world equity index (1228) has broken below support of its orderly parallel downtrend. If anything, the weakness is spreading and the downtrend in world markets is accelerating. The S&P500 (1156) fell by nearly 5% yesterday, its biggest one-day fall in percentage terms since 9/11/2001. The composite is now down by 26% from its October peak and has erased half of its gains from the five-year bull market that began in 2002. On the domestic front, we expect the JSE all share index (1156) to test support at 22000. In the near-term, we expect the weakness to be driven primarily by resources which remain poorly supported. Bloomberg reports that about $4.4 trillion of market value has been erased from global stocks this week. Meanwhile, investors' flight to perceived safehaven assets resulted in three-month Treasury bill yields falling yesterday to 0.0201%. This is their lowest level since the end of World War II. A related observation, reflecting the reluctance of US banks to make loans, is that the rates charged for short-term loans relative to US bill rates rose yesterday to the highest level on record. Further, the cost of borrowing in dollars for three months jumped the most since 1999 and Libor's 19 basis point rise yesterday was the biggest one-day rise since September 1999's Y2K fears. We do not think that this is the time to be contrarian and pick the bottom!
