02 - 09 October 2015
A look at local and international economic data, major events, economic releases and company news expected in the week to come.
By Shaun Murison, Market Analyst
September marked the end of the 3rd quarter of 2015 and with that; we take a brief look at JSE sector performances over the period.
The last three months saw markets continue to digest the reality of a slowing Chinese economy whilst speculating on the U.S. Federal Reserve Bank’s timeline, in terms of when rates will be tightened in world’s largest economy.
The result of these two primary market themes have bode poorly for equity markets in general, but more specifically for resource counters which were firmly entrenched in the quarter’s poor performance list.
Platinum counters were hardest hit as losses in the underlying price of the metal were compounded by news of the VW emissions scandal. Lower diesel vehicle production from one of the globes biggest car manufacturers would equate to less demand for platinum (used in catalytic converters to reduce emissions).
The sector list reads poorly in terms of the number of indices ending the period in positive territory, relative to the number of indices ending the period in negative territory.
The consumer goods sector was the clear outperformer following a strong move in September by SABMiller Plc, which is heavily weighted within the index. SABMiller is in talks with Annheuser-Busch Inbev (AB Inbev), about a possible merger, which if successful could see one company accounting for nearly a third of global beer sales. No formal bid has been communicated to the market as of yet, although speculation is for an offer of between $100bn and $106bn.
In second place on the gainers list is the Forestry & Paper index. The index is largely a reflection of The Mondi Group, who’s Ltd and Plc listings are accompanied only by Sappi Ltd in terms of the index’s weighting. The Mondi Group released another strong set of interim results (within the quarter) in which operating profit was highlighted as having increased by 30% against the comparative period.
As of 02/10/2015
|05-Oct||African Oxygen Ltd||Ex-Dividend||R0.18|
|05-Oct||Clover Industries Ltd||Ex-Dividend||R0.334|
|05-Oct||Murray & Roberts Holdings Ltd||Ex-Dividend||R0.5|
|05-Oct||RMB Holdings Ltd||Ex-Dividend||R1.54|
|05-Oct||RMI Holdings Ltd||Ex-Dividend||R0.64|
Source: Economic Calendar, as of 02/10/2015
Poor Chinese industrial earnings data sparked exaggerated declines within the commodity space at the beginning of the week and in turn, a selloff in global resource counters. Markets then rallied into the end of the quarter (Wednesday), a move that extended into the week, after Chinese manufacturing data came in ahead of consensus estimates. The extent of gains, despite the China PMI figure still alluding to industry contraction, is perhaps a suggestion that the selloff we have seen in markets might have capitulated for the time being. The real test will be to see whether markets can hold onto the bullish impetus rather than let it fade, as has been the trend in the last month.
In the U.S, employment data at the end of the week fell short of expectations with only 142000 jobs added to the non-farm payroll (est. 201000). The unemployment rate was reported as having remained at 5.1%.
Trade deficit in South Africa widened unexpectedly to R9.90bn in August (Est R3.4bn), while the previous months deficit was revised to R1.10bn.
The South African Reserve Bank has indicated that, in August, on an annual basis, the private sector credit in South Africa rose 8.6%, higher than market expectations for an advance of 8.5%. The private sector credit had advanced 8.4% in the previous month.
M3 money supply registered an increase of 10.0% on an annualised basis in August. In the prior month, M3 money supply increased by 10.3%.
The Week Ahead
The new week will see most of the high impact economic data coming from the U.S. once again, with services PMI data out on Monday, trade balance data out on Tuesday and the minutes of the FOMC meeting scheduled for release on Thursday.
On the domestic front, the health of the mining and manufacturing sectors will be assessed further following the release of production and sales data for these industries on Thursday.
|05-Oct||16:00||USD||ISM non-manufacturing PMI||-||59|
|06-Oct||19:00||EUR||ECB President Draghi speaks||-||-|
|07-Oct||10:30||GBP||Manufacturing production m/m||-||-0.80%|
|08-Oct||13:00||GBP||MPC official bank rate votes||1-0-8||1-0-8|
|08-Oct||13:00||GBP||Monetary policy summary||-||-|
|08-Oct||13:00||GBP||Official bank rate||0.50%||0.50%|
|08-Oct||20:00||USD||FOMC meeting minutes||-||-|
|08-Oct||13:00||SA||Manufacturing: Production & sales, August 2015||-||5.60%|
|09-Oct||23:30||SA||Mining: Production & sales, August 2015||-||5.60%|
Source: Economic Calendar, as of 02/10/2015
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Source: INET BFA, as of 02/10/2015