Market Commentary | The week that was

Globally, markets continue to be on the back foot as Netflix shares dropped by 21.8% on Friday. When releasing its fourth-quarter earnings last Thursday, the company admitted that streaming competition was biting into its market share. Although the company and analysts had anticipated a large jump in consumers at the end of 2021 – with the release of new TV shows and movies that had been pushed to the back of the year - the growth in competition from other companies resulted in a slowdown that rocked investors. Netflix CEO, Reed Hastings, was infamously remembered for saying in 2017 that ‘sleep is our competition’ – there seems to be a slight change in tone today.

Meanwhile, the tech heavy Nasdaq has been under pressure since the beginning of the year. This week results of its biggest names are expected. They include Microsoft on Tuesday; Tesla on Wednesday; and Apple on Thursday.

The sell-off on Friday spilled over to the local market as the JSE All Share lost 1.8% - marking the first week in 2022 that the All Share was down. The Top-40 index lost 2%. The fact that the oil price reached its highest level in seven years also made headlines, due to concerns over supply disruption amid rising tensions in Eastern Europe and the Middle East, as the Organisation of the Petroleum Exporting Countries (OPEC) and its allies are still struggling to raise output.

The following important announcements can be expected in the week ahead: The US Federal Reserve’s (FED) meeting on Tuesday and Wednesday – a big event for markets globally; and the SA Reserve Bank’s (SARB) first monetary policy committee (MPC) meeting of the year. Economists’ expectation is an interest rate hike as inflation pressures remain persistent (according to a Reuters poll 18 out of 23 economists expect the SARB benchmark repo rate be raised to 4%.)