The Week Ahead 14 February

14 February 2014

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

By Shaun Murison, IG Market Analyst

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Company announcements

Dividends

Economic catalysts

Market overview

The All-Share index looks to complete its seventh day of consecutive gains, moving within touching distance of its all-time highs. Resource counters are once again at the forefront of this week’s gains, following higher commodity prices while the rand remains weak although well off this year’s lows.

Mining production figures reported for South Africa in December 2013 showed a strong 12% annualized growth. The main contributions to the increase came from iron ore followed by platinum group metals (PGMs) and gold.

Retail sales figures at constant prices were a beat on consensus, with year on year growth at 3.5%, while manufacturing production for 2013 increased a lackluster 1.5%.

In the US, Janet Yellen addressed the public for the first time in her new role as Federal Reserve Bank chairman. Mrs. Yellen highlighted that she remained committed to her predecessor’s path of economic stimulus relative to growth and employment conditions in the US.

The supporting data this week out of the world’s largest economy was subpar, with weekly unemployment claims being worse than expected, while month-on-month retail sales showed an unexpected contraction. The news has witnessed a softer dollar and in turn higher commodity prices.

Source: IG Insight, as of  14/02/2014 11:40

Top movers

Source: IG Insight, as of 14/02/2014 11:20

The recent market theme continues as resource counters remain favoured in our local market, while retail counters continue to decline.

A weaker dollar has followed subpar US economic data, which has witnessed spot gold rebound back above the $1300/oz mark.  Local gold miners have benefited from the strong move in dollar denominated gold especially while the rand remained weak, albeit much improved from this year’s worst levels.

General retailers find themselves under pressure as sentiment is once again hampered by sector specific news. JD Group announced in its results that it would look to recapitalize its business through a rights offer as bad debts grow amidst a pressured consumer, which has affected the company’s earnings.

Investors are reminded of the recent African Bank/Ellerines impairment and subsequent recapitalization and draw concerns around retailers with an affinity for credit sales.    

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Spotlight on equities

An analysis of upcoming company announcements, using our market insight information and analysis tools:

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