- Other markets
- CFD trading
- Trading platforms
- Market insight
- About IG
Volatility was relatively muted this week, major indices drifted marginally lower as anticipated international catalysts failed to produce any surprises to financial markets.
The economic data released out of South Africa this week was disappointing for the most part, with the manufacturing sector proving to have slowed more than expected.
The Markit and Kagiso Manufacturing Purchasing Managers Index’s (PMI) both recorded readings of 47.40 for April, alluding to industry contraction where minor expansion was expected. A Statistics South Africa report showed that manufacturing production in South Africa fell 1.9% in the first quarter of 2014, on a seasonally adjusted monthly basis, while growing a mere 0.7% on an annualised basis.
The unemployment rate in South Africa worsened to 25.2% in the first quarter of 2014, largely as a result of the informal sector shedding 110 000 jobs (122 000 jobs were over the period). The figure now equates to 5.1m people being unemployed in South Africa.
The European Central Bank (ECB) left benchmark lending rates unchanged once again, while alluding to further economic stimulus as soon as June 2014. ECB president Mario Draghi cited concerns over a stronger Euro invoking a deflationary environment as reasons for the nearing of easing policy measures.
In the UK the current asset purchase facility remained unchanged, as did the BOE’s lending rates.
In the US, Fed Chairlady Janet Yellen reaffirmed a dovish stance after last week’s positive employment data. With the unemployment rate falling below the 6.5% threshold, investors may be cautious of an increasing interest rate cycle. However, with inflation lingering at lower levels, Mrs Yellen has reassured investors of a prolonged lifespan of the status quo.
Resource counters have underperformed this week, as a stronger rand and weaker commodity prices have weighed on our local miners. Despite a positive quarterly update from Harmony Gold, gold shares have found themselves the laggards of even the resource sector.
Tensions between Russia and Ukraine have provided the directional catalyst for dollar denominated gold as of late.This week Russian President Vladimir Putin has promised to withdraw his troops from the Ukrainian border, which combined with last week’s strong jobs report out of the US witnesses the precious yellow metal trading softer. The renewed strength in our local rand has added to the unfavourable conditions for local gold miners.
Industrial and financial counters remain the preferred sectors in our local equity market this week. Foreign investment flows into our domestic companies over the last month have favoured the likes of Firstrand, MTN, Vodacom and Barclays Africa Group among others.
Mediclinic International released a trading statement which was met favourably by the investment community. Normalised headline earnings per share (excluding once off items) is expected to have increased an impressive 40% to 50% relative to the corresponding full year reporting period.
Follow one of the links below for a quick look at our web-based platform and the range of markets on offer.
If you're interested in finding out more about the range of markets available and the functionality of our trading platform, you can open a demo account.
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: I-Net Bridge