9 - 13 February 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
This week witnesses a resource heavy weighting in the gainers list as commodity prices (led by oil) start to improve, although this was partially offset at the tail end of the week as dollar strength followed U.S. employment data. The decliners list features an abundance of equities which have frequented the gainers list in weeks gone by.
A more than 20% rebound off the lows in Brent Crude oil, has seen Sasol echo the same relief from what has been a difficult few months. News that 7% of U.S. drillers had halted production provided impetus for a rebound in oil. Further news that Sasol is to postpone development on its rather “expensive” new ethane cracker in the U.S. has also helped appease investor sentiment. Friday saw the company release a trading update in which an increase in Headline Earnings Per Share (HEPS) of between 3% and 9% is expected.
Retailers Woolworths and Mr Price have found sector based weakness this week on the back of profit taking. The shares which have recently been testing all-time high territory and were some of January’s top performing shares. The respective share price declines, in the absence of any new news, have led us to the aforementioned assumption.
Woolworth is set to release interim results in the new week. The company issued a trading statement last month in which it has stated that group sales (including the impact of new acquisition David Jones) are expected to have increased by 55.2%. Barclays Africa’s decline from all-time high territory highlights short-term exhaustion in the share as the move comes despite a ratings upgrade from the Fitch Rating agency.
|9-Feb||Harmony Gold||Interim Results|
|9-Feb||Anglo American Platinum||FY Results|
|9-Feb||Tiger Brands Ltd||Q4 Trading Update|
|10-Feb||Kumba Iron Ore||FY Results|
|10-Feb||SABMiller Plc||FY Results|
|11-Feb||Group Five Ltd||Interim Results|
|11-Feb||Sappi Ltd||Q1 results|
|11-Feb||Aquarius Platinum||Interim Results|
|12-Feb||GoldFields Ltd||FY Results|
|13-Feb||Anglo American Plc||FY Results|
|13-Feb||ArcelorMittal South Africa||FY Results|
Global commitments to stimulating economic growth have once again been reaffirmed, as the Royal Bank of Australia (RBA) cut lending rates by a further 25 basis points this week and the Peoples Bank of China (PBOC) reduced the reserve requirement ratio in an attempt to boost lending. The move follows the current central bank trend in global markets which is to further ease or maintain accommodative monetary policy, as slowing growth and deflationary fears remain prevalent.
In Europe, the European Central Bank (ECB) announced that it would no longer accept Greek sovereign debt as collateral going forward. The ECB did however follow this up by saying that it would help provide the country’s banks with up to EUR60bn of emergency funding if needed.
In the U.S., non-farm payroll data showed that 257 000 people were added to the payroll in January 2015, while the unemployment rate worsened slightly to 5.7% the participation rate of those actively seeking employment remained low at 62.9%.
In what has been a quiet week domestically on both the economic and earnings front, our market has been quite buoyant following improved commodity prices and further global monetary easing. The manufacturing Purchasing Managers’ Index (PMI) for January alluded to industrial growth higher than what was expected, with an index reading of 54.20 (est. 50.1). The figure was also ahead of December’s reading of 50.20.
The business confidence index reading for January was slightly better than the previous months reading, coming in at 89.30, although still reflecting a hampered business sentiment. The South African Reserve Bank (SARB) reported net gold and foreign exchange reserves to have dropped to $42.145bn in January from $42.727bn in December 2014.
The week ahead
The new week will see the release of December 2014’s local mining and manufacturing production data in which investors will be hoping to see a move back into growth in both departments from the previous months reported contraction. The South African president is also set to release his state of the nation address on Thursday.
The week will end with further evidence over the health of the European economy as Gross Domestic Product (GDP) data is scheduled for release from Germany, France, Italy and the Eurozone.
|10-Feb||11:30||UK||Manufacturing production m/m||0.3%||0.70%|
|10-Feb||13:00||SA||Manufacturing production m/m||-||0.70%|
|12-Feb||10:00||SA||Mining production and sales||-||-0.40%|
|12-Feb||12:30||UK||BOE inflation report||-||-|
|12-Feb||15:30||US||Core retail sales m/m||-0.4%||-1%|
|12-Feb||15:30||US||Retail sales m/m||-0.3%||-0.90%|
|12-Feb||15:30||US||Unemployment claims w/w||279000||278000|
|12-Feb||18:00||SA||State of the nation address||-||-|
|13-Feb||08:30||EU||French preliminary GDP q/q||0.1%||0.30%|
|13-Feb||09:00||EU||German preliminary GDP q/q||0.3%||0.10%|
|13-Feb||11:00||EU||Italian preliminary GDP q/q||0%||-0.10%|
|13-Feb||12:00||EU||Eurozone flash GDP q/q||0.2%||0.20%|
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|11 February||18:30||IG office, Johannesburg||1.5hrs|
|12 February||18:30||Pretoria Country Club, Pretoria||1.5hrs|
|25 February||18:30||Premier Hotel Regent, East London||1.5hrs|
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Source: INET BFA, as of 06/02/2015