The Week Ahead

20 June 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

Local Data

Consumer Price Index (CPI) data showed inflation to have increased 0.2% in May and is now recorded at 6.6% annualised, which appears to near date the future prospect of increased interest rates from the South African Reserve Bank (SARB). The SARB reported that the current account deficit in the first quarter was looking healthier, as the deficit surprisingly narrowed  in the first quarter of 2014 to -4.5% of Gross Domestic Product (GDP) from -5.1% of GDP in the previous quarter. The improvement in the current account shortfall was largely due to reduced dividend payments from companies to foreign investors.

Retail trade sales for April 2014 increased by 1.8% year on year, with the main contribution to the figure coming from retailers in textiles, clothing, footwear and leather goods.

South African Wholesale trade sales measured in real terms at constant 2012 prices decreased by 0.7% year on year in April 2014, while motor trade sales decreased by 2% year-on-year. Negative annual growth rates were recorded for new vehicle sales, used vehicle sales and accessory sales at -8.1%, -5% and -3% respectively.

The platinum strike has had another setback in finding resolve after AMCU brought new demands to the table which are outside of the agreement in principle reached regarding wage increases with platinum producers. Some of the new demands include a R3000 comeback bonus for employees as well as a moratorium on restructuring and retrenchments.

International Data

The major market catalyst this week has been the Federal Open Market Committee (FOMC) meeting on Wednesday. Federal Reserve Bank Chairperson Janet Yellen’s dovish comments, alluded to interest rates remaining at current low levels well into 2015 which have found favour, especially with commodity prices such as that of gold bullion.

Spot gold has gained in excess of $50/oz this week on both Mrs Yellen’s comments as well as continued tensions between Islamist Militants and Iraqi forces which are fueling safehaven buying of the precious yellow metal. The middle eastern tension’s also continue to catalyse a  higher price of brent crude which now trades at around $115/oz.

Source: IG Insight, as of  20/06/2014

Top movers

Source: IG Insight, as of 20/06/2014

This week witnesses resource counters dominating the top movers list following more upbeat commodity prices. The US Federal reserve’s dovish comments on Wednesday have catalysed a weaker dollar against fellow frontier market currencies and in turn an inflationary run on commodity prices. The rand although slightly firmer in trade this week, remains at elevated levels which is also complimenting local miners.

Vodacom finds itself the only non-resource counter in the gainers list as the company approaches its ex-dividend date on Monday the 23rd June. The blue chip decliners list shows only marginal losses on the constiuents thereof. Aspen Pharmacare, Tigerbrands and Imperial holdings are finding slight weakness; following was has been significant gains recently.

Not featuring in in either lists today are local banking counters. The Standards and Poors ratings agency announced a downgrade of all four major banks. Initial losses in banking share prices were only temporary and largely offset after only one day’s trade.

Volumes across locally equities were high this week and on Thursday in particular as a result of futures close out. 

 

Broker consensus

Brokers view on the markets.

Click to view this week's broker consensus

 

 

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