The Week Ahead

04 April 2014

Our regular look at the news making the headlines, using our market insight information and analysis tools.

By Shaun Murison, IG Market Analyst

View market data

Company announcements

Dividends

Economic catalysts

Market overview

The new month and quarter has been positive for equity markets, as US and local indices move into new high territory once again.

Local Data

An unexpected trade surplus of R1.7bn was reported for February, which was both a beat on expectation (R3.50bn deficit) and an improvement on the previous month reading (R16.9bn deficit). Money supply rose by 5.9% while private sector credit increased by 8.7%, which combined with the trade balance data have helped provide internal excuse for the rand to remain firm this week.

Kagiso Manufacturing PMI data showed marginal industry expansion with a reading of 50.30, although alluding to a marginal decline in growth from the previous month.

International Data

Markets were given a boost in the beginning of the week after US Fed Chairlady, Janet Yellen, issued a doveish statement reiterating the Federal Reserve Bank’s commitment to supporting the economy. The statement has provided positive sentiment to markets offsetting the recent fear induced by Mrs Yellen, after she previously suggested a six month timeline to the increasing of interest rates.

The all-important jobs data, out of the US, showed that 192 000 jobs were added to the non-farming payrolls in March, while the unemployment rate remained at 6.7%. The data missed expectation by a small margin and as a result incited little in the way of accelerated market volatility.

In Europe, the ECB left benchmark interest rates unchanged as consensus estimates had predicted. The Euro traded slightly softer against the greenback as further suggestion was given, by ECB President Mario Draghi, that more stimulus could be afforded to the Eurozone economy in the near future.

Source: IG Insight, as of  04/04/2014 15:07

Top movers

Source: IG Insight, as of 04/04/2014 14:50

After a lackluster performance in March, resource counters are attempting to continue the positive run witnessed in January and February this year.

Anglo American Platinum continues gains despite the ongoing strike within the sector. Recent reports suggest that after ten weeks of continued strike action, Anglo Platinum still has 215 000 ounces of platinum stockpiles left, which amounts to around 50% of the original stockpile from when the labour activity began. Company CEO, Chris Griffith says the company is operating at sixty percent of normal capacity.

The list of top decliners this week has been more diverse than in previous weeks, while Naspers finds itself within the list for the third week in a row.

Naspers continues to track its Tencent counterpart in China lower, as internet businesses with stretched valuations suffer severe losses following the Peoples Bank of China’s (PBOC) ruling to halt mobile payments via the scanning of barcodes a few weeks back.

Massmart and Tiger Brands have retraced this week in the absence of any new news relating to the companies. The last few weeks have seen positive runs on the respective companies and the short-term weakness considers profit taking as possible reasoning.

Broker consensus

Brokers view on the markets.

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