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.