Johannesburg, 17 October 2023: After experiencing robust gains in the first half of 2023, there are indications that global equities may predominantly yield negative returns in the third quarter. It appears that the optimism that fuelled the initial rally in the markets was somewhat misplaced, primarily stemming from expectations of imminent rate reductions by the Federal Reserve and other central banks. The phrase "higher for longer" has gained prominence on Wall Street. Notwithstanding this, a select few stocks have managed to defy the prevailing trend, exhibiting remarkable resilience. Fred Razak, the Chief Trading Strategist at CMTrading, offers his insightful analysis of the market's performance.

Tech Titans Standing Firm

"Presently, the high-tech market has showcased remarkable resilience, likely owing to the anticipation that artificial intelligence (AI) will drive substantial activity within this sector. We anticipate companies like Meta (formally known as Facebook) Google, Apple, and Microsoft outperforming other sectors.

"The growth trajectory of Apple over the past 18 years has been nothing short of remarkable. Consistently introducing innovative products to the market has been a key driver of their success, and this pattern appears to have become a cornerstone of their operations. We anticipate that Apple will sustain this growth, whether through increased iPhone sales or the introduction of new products, possibly related to virtual reality (VR). What sets them apart is their fiercely loyal customer base, a pivotal element in sustaining Apple's growth," says Razak.

"While Blackberry is being hailed as a promising prospect due to its foray into cybersecurity, likely integrated with AI, projecting increased revenue for 2024 to 2026, I would advise caution. They face stiff competition, and whether they will meet these ambitious targets is uncertain. This new venture represents a mere fraction of what was once a thriving mobile phone business, making a significant comeback seem unlikely at this stage," Razak cautions.

Alternative Tech Brands

"Tesla is set to release its results on October 18th, and although sales figures have dipped, this can be attributed to planned plant shutdowns rather than a loss of market share. Tesla has successfully cultivated a brand image similar to Apple's, creating a dedicated user base. Their technological prowess and standards place them far ahead of their competitors, even though some Chinese companies are making inroads, primarily in the higher-end, luxury vehicle segment, not the mid-size, everyday vehicles," explains Razak.

"Netflix has made a remarkable resurgence after a temporary dip from its all-time high of $445. It currently trades at $385, a noteworthy performance considering the prevailing recessionary climate. To maintain this momentum, their focus should be on developing original content rather than relying solely on third-party content. They compete with an array of brands, from Amazon to iTunes, and are carving out a niche as a major player in the entertainment industry," observes Razak.

Energy Sector in the Spotlight

"While energy companies do stand to benefit from rising oil prices, it's essential to recognise that these factors are not as closely correlated as one might assume.

"There is an increased oil production capacity in response to the lingering effects of the pandemic. We are witnessing several cycles in the oil market, characterised by periodic drops in OPEC output, subsequently leading to oil price increases," he elaborates. "It's worth noting that these dynamics occur against an inflationary backdrop. In relative terms, we are still some distance from the historical highs of nearly $150 per barrel for oil."

"When we discuss oil, it's crucial to appreciate that geopolitical factors influence prices. Ongoing conflicts such as the Russian-Ukrainian war instability in the Middle East mean we cannot anticipate a sustained, linear trend moving forward," emphasises Razak.

It is evident that the markets continue to evolve, offering both opportunities and challenges. As the uncertainties of the third quarter are navigated, vigilance, the ability to adapt to changing conditions, and exercising prudent judgment in investments is key.

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