8 - 12 June 2015
A regular 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
Kumba Iron Ore has continued the move, which sent the share to the top of the gainers list last week after news broke that Chinese stockpiles of the steel making ingredient had started to contract.
In the current trading week, iron ore reached a three-month high following suggestions that the seaborne market for the metal has seen an increase in demand as reported by the Steel Index. Kumba would have also seen the significant weakening of the rand improve market sentiment around the company’s export prospects.
Market movements have been catalysed by macroeconomic events, as the week’s company calendar has been very light compared to that of weeks gone by. The incremental gains on the gainers list, relative to the large declines on the decliner’s lists, once again highlight a broader market, which is under significant pressure.
Broad-based selling has been the order of the day, as those market participants unwinding positions look to have done so indiscriminate of sector. When this phenomenon occurs, it is reflected in uncorrelated shares moving in a correlated fashion and is indicative of a fear present in markets.
|08-Jun||MAS Real Estate||Ex-Dividend||EUR:0.0115|
|08-Jun||Pik n Pay Stores Ltd||Ex-Dividend||R0.985|
|08-Jun||Pik n Pay Holdings Ltd||Ex-Dividend||R0.4785|
|08-Jun||Spar Group Ltd||Ex-Dividend||R2.39|
|08-Jun||Telkom SA SOC Ltd||Full-year results, 2015||n/a|
|08-Jun||Tsogo Sun Holdings Ltd||Ex-Dividend||R0.6|
|10-Jun||Peregrine Holdings Ltd||Full-year results, 2015||n/a|
|12-Jun||Mediclinic International Ltd||Ex-Dividend||R0.755|
|12-Jun||Mr Price Group Ltd||Ex-Dividend||R3.69|
Source: Economic Calendar, as of 05/06/2015
Volatility has increased as broad-based sector declines have been the order of the week amidst a light local calendar but high impact international calendar.
The South African Chamber of Commerce and Industry's business confidence index fell to 86.90 in South Africa, in May from a reading of 89.90 in the previous month. The South African HSBC Purchasing Managers' Index (PMI) fell to 50.10 in May from 51.50 in April.
The severe depreciation of the rand has perhaps been the most significant of moves as it shed in excess of 3% against the dollar, capitulating after strong U.S. employment data was released on Friday afternoon.
In Europe, Greece continued to dominate market headlines as the country’s debt repayment deadline (5 June), in terms of funds due to the International Monetary Fund (IMF) drew near. In deadlocked talks with the Troika bailout funds for Greece are yet to be secured and in turn, the repayment due to the IMF has now been deferred to the end of the month.
In the U.S., Friday’s non-farm employment change data came in well ahead of expectation (221000) with 288000 jobs reported as being added to the payroll in May 2015. Average hourly earnings increased 0.3 percent from the prior month and the participation rate of those actively seeking employment increased to 62.9% from 62.8% in the preceding month. The unemployment rate did however rise to 5.5% from the previous month’s level of 5.4% as more people were recorded as having entered the labour force.
The week ahead
The new week will see the domestic market updated in terms of the current health of the mining and manufacturing industries, as production and sales data for April 2015 is scheduled for Thursday.
Chinese trade balance data on Monday morning will be of particular importance, as market participants look to see the regions level of trade, which as of late, has witnessed a decline in both imports and exports amidst a slowing economy. This will be furthered by Thursday’s industrial output data scheduled for release.
In the U.S., retail sales data on Thursday and Producer Price Index (PPI) data as well as consumer sentiment data on Friday will be closely monitored in light of the prevalent theme of the timing of monetary tightening within the region.
|10-Jun||10:30||GBP||Manufacturing production m/m||0.40%|
|11-Jun||07:30||CNY||Industrial production y/y||5.90%|
|11-Jun||14:30||USD||Core retail sales m/m||0.10%|
|11-Jun||14:30||USD||Retail sales m/m||
|11-Jun||11:30||SA||Mining:Production & sales Apr 2015||18.80%|
|11-Jun||13:00||SA||Manufacturing:Production & sales Apr 2015||3.80%|
|12-Jun||16:00||USD||Prelim UoM consumer sentiment||90.7|
Source: Economic Calendar, as of 05/06/2015
IG provides an execution-only service. The material on this website does not contain (and should not be construed as containing) investment advice or an investment recommendation, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of the above information. Consequently any person acting on it does so entirely at his or her own risk. The research does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. This communication must not be reproduced or further distributed. The price levels provided are derived from ProRealtime Charts (IT-Finance)
Source: INET BFA, as of 05/06/2015
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.