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The Week Ahead

Read about upcoming market-moving events and plan your trading week

Shaun Murison

Our weekly report is compiled by in-house senior market analyst, Shaun Murison.

Shaun has worked in financial markets for over ten years. As market analyst, he presents our CFD trading seminars around the country. In addition, Shaun is a regular commentator on the local financial markets, contributing to various media (such as CNBC Africa and Business Day) and writing daily and weekly market reports. He is a registered person at the JSE as well as a Certified Financial Technician (CFTE). You can follow Shaun on Twitter at @ShaunMurison_IG for regular market updates and insight.

The Week Ahead

19-23 February

Local

Data released from Statistics South Africa this last week has shown that South Africa's mining, retail, and wholesale sectors faced mixed fortunes in 2023

The South African mining sector has provided a glimmer of hope as it witnessed a slight increase in production by 0.6% year-on-year in December 2023. The uptick was primarily driven by significant contributions from platinum group metals (PGMs), coal, and chromium ore, with PGMs leading the way with a 9.4% increase. Coal and chromium ore also showed robust growth, contributing 1.3 and 0.7 percentage points to the overall increase, respectively.

Despite this positive momentum, total mining production was down by 0.4% in 2023 compared to 2022, marking a period of volatility in the sector.

In the retail space, despite an overall decrease of 1.0% in retail trade sales in 2023 compared to the previous year, there were pockets of growth. Textile, clothing, footwear, and leather goods retailers experienced a year-on-year increase in sales by 7.0% in

December 2023, contributing substantially to the sector's performance.

However, the motor trade sector faced challenges, with a notable decrease in sales by 2.5% year-on-year in December 2023. This was largely due to significant declines in workshop income and new vehicle sales.

Wholesale trade sales also declined, with a 3.1% decrease in 2023 compared to 2022, and an 8.0% year-on-year drop in December 2023.

he new week will see traders looking to unemployment data as well as the National Budget Speech as key local catalysts for market direction.

International

US consumer prices have gained more than expected at the beginning of the year, signaling a challenge to the disinflationary trends that had been observed previously. This uptick in the consumer price index (CPI) has implications for both the Federal Reserve's monetary policy and the performance of financial markets, including equities and bonds.

The CPI, a key measure of inflation, rose unexpectedly across various categories, not only monthly but also year-over-year. Core measures, which exclude volatile food and energy prices, also climbed, indicating broad-based price pressures.

As a result, the S&P 500 Index, represented by the ticker symbol SPX, experienced a decline, reflecting investor concerns about the inflation data's impact on corporate earnings and consumer spending. Conversely, the US dollar, as well as Treasury yields, saw an immediate jump post-CPI release, hinting at expectations of a more hawkish stance from the Federal Reserve to combat inflation.

Chicago Fed President Austan Goolsbee's comments did however calm markets somewhat. Goolsbee indicated that a temporary overshoot in inflation could still align with the Federal Reserve's long-term target of 2%. This perspective has helped restore some optimism in the markets, as evidenced by a partial reversal of the initial negative reactions.

Moreover, the irony of weaker-than-expected retail sales data has offered an unexpected boost to equity markets, symbolized by the S&P 500 Index. These lower sales figures suggest a potential moderation in economic activity, which could, in turn, reduce inflationary pressures and support the case for the Federal Reserve to ease interest rates sooner rather than later.

Recent economic indicators have shown a contraction in the UK's Gross Domestic Product (GDP), suggesting that the region has now entered a technical recession. This downturn in economic activity is not isolated to the UK alone; Japan, traditionally a powerhouse in the global economy, has also signaled a recessionary phase. Meanwhile, Germany has ascended to claim the position of the third-largest economy worldwide, overtaking Japan.

This week, traders will look to services and manufacturing pmi data in Europe and the US as key catalysts for short term market direction, although minutes from the last Federal Open Market Committee (FOMC) meeting is expected to be the big risk event to watch out for.

bar graph displaying global indices Source: IG Charts
bar graph displaying global indices Source: IG Charts

The Rand

The rand remains weakened although has managed to recover off its worst levels of the week and month to date.

Amongst domestic causes for weakness this month have been escalating power outages by Eskom, continued freight congestion at ports, as well as political uncertainty within the country.

US data has provided the international catalysts for ZAR direction. While worse than expected US inflation data initially saw strength in the dollar, comments from Fed officials and weaker retail sales data tempered these gains later on in the week.

The new week will see traders looking to unemployment data as well as the National Budget Speech as key local catalysts for market direction.

Bar graph displaying south african rand forex pairs Source: IG charts
Bar graph displaying south african rand forex pairs Source: IG charts

Commodities

Base metals led by copper, have produced a relatively strong rebound in the week gone. However most still remain in negative territory for the month to date.

A sharp decline in inventory levels and the suggestion that Chinese authorities are likely to add more stimulus support to their economy, including measures to boost consumption, has assumed more demand to follow for these commodities.

Oil prices have continued to gain after efforts towards a ceasefire in the Hamas / Israel conflict were rejected.

Source: IG charts
Source: IG charts

Companies

KAP Industrial Holdings Ltd: Headline earnings per share (HEPS) for the interim period are expected to decrease by between 25% and 36% from the prior year’s comparative period.

Barloworld Ltd: In the first four months of the 2024 financial year, Barloworld saw a 5% reduction in group revenue when compared to the four months to 31 January 2023 (the “prior period”)

Pan African Resources PLC (SA): Headline earnings for the interim period increased by 46.4% from the prior year’s comparative.

Santam Ltd: HEPS for the year ended 31 December 2023 is expected to increase by between 17% and 37% from the previous year.

Calgro M3 Holdings Limited: HEPS will increase by at least 20% to be at least 183.82 cents, when compared to the HEPS of 153.18 cents reported for the year ended 28 February 2023.

Graph comparing the johannesburg stock exchange indices Source: IG charts
Graph comparing the johannesburg stock exchange indices Source: IG charts

Company announcements

Date

Company

Event Type

19 February 2024

Citi Lodge

Earnings Release

19 February 2024

Spur Corp

Earnings Release

19 February 2024

Gold Fields

Earnings Release

19 February 2024

Adcock Ingram

Earnings Release

19 February 2024

Octodec Investment

Earnings Release

20 February 2024

Blue Label Telecoms

Earnings Release

21 February 2024

Bid Corp

Earnings Release

21 February 2024

Kumba Iron Ore

Earnings Release

21 February 2024

Transpaco

Industry Specific Release

21 February 2024

Italtile

Earnings Release

22 February 2024

Aveng

Earnings Release

22 February 2024

Texton Property Fund Ltd

Earnings Release

22 February 2024

Super Group Ltd

Earnings Release

Economic calendar

Date

Time

Region

Event

Previous

20 February 2024

11:30am

ZAR

Unemployment rate

31.90%

21 February 2024

9:00pm

USD

FOMC Meeting Minutes

21 February 2024

10:00am

ZAR

CPI y/y

5.10%

21 February 2024

2:00pm

ZAR

National Budget Speech

22 February 2024

10:15am

EUR

French Flash Manufacturing PMI

43.1

22 February 2024

10:15am

EUR

French Flash Services PMI

45.4

22 February 2024

10:30am

EUR

German Flash Manufacturing PMI

45.5

22 February 2024

10:30am

EUR

German Flash Services PMI

47.7

22 February 2024

11:30am

GBP

Flash Manufacturing PMI

47

22 February 2024

11:30am

GBP

Flash Services PMI

54.3

22 February 2024

3:30pm

USD

Unemployment Claims

212K

22 February 2024

4:45pm

USD

Flash Manufacturing PMI

50.7

22 February 2024

4:45pm

USD

Flash Services PMI

52.5

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