The Week Ahead

25 July 2014

Our regular look at the news making the headlines, using our market insight information and analysis tools - now with online videos and tutorials.

By Shaun Murison,  Market Analyst

 

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Company announcements

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Market overview

Local Data

Strength in the rand has been perhaps the most substantial move in what has otherwise been a lacklustre trading week.

Consumer Price Index (CPI) data for June 2014 showed inflation to have remained at 6.6%, which although outside of the reserve banks targeted band, was marginally ahead of expectations for a 6.7% increase. Optimism that the strike within the manufacturing sector was to find resolve has not yet found fruition after the National Union of Metalworkers South Africa (NUMSA) has requested changes to the employers offer earlier on in the week.

The Steel and Engineering Industries Federation of South Africa (SEIFSA) representing employers offered a 10% increase for low- level workers over the next three years with the offer deadline expiring at the end of the week. The union is requesting a change to the Section 37 clause within the offer which relates to cost related employment issues being negotiated at a national level rather than a company level.

The South African Reserve Bank’s (SARB) “leading indicator in South Africa” showed an improved reading in May of 99.60 from 99.50 in April.

International Data

In the UK, policy makers voted unanimously in favour of holding the current asset purchases and interest rates at current levels. Retail sales growth month on month was soft at 0.1%, while preliminary GDP data quarter on quarter was in line with expectation at 0.8%.

Manufacturing and Services PMI data out of Europe was mixed, but alluded to industry growth within both sectors.

In the US, inflation was reported to have eased further last month, with CPI data for June coming in at 0.3%. Existing home sales were a marginal beat on consensus estimates and the previous month’s reading, while weekly unemployment claims showed 19 000 less people filed for unemployment benefits than the preceding week.

In China, Flash Manufacturing PMI data showed an index reading of 52, which was a beat on consensus estimates (51.2) as well as the previous months reading (50.7)

Source: IG Insight, as of  25/07/2014

Top movers

Source: IG Insight, as of 25/07/2014

In a week where we have seen renewed strength in the rand, the top decliners list is headed predominantly rand hedge industrial counters.  

SABMiller has declined marginally despite reporting stronger sales volumes in the first quarter. Total beverage volumes grew 3% over the period led by a 10% increase in soft drinks, while lager volumes added only 1%. The group’s financial performance was in line with consensus estimates.

This week’s top gainers list is dominated by Anglo American Plc and its subsidiaries, Kumba Iron Ore and Anglo American Platinum. Kumba’s first half profit fell by 16% in the interim period on the back of a pressured iron ore price, although production is reported to have increased by 5%. Investors are optimistic that iron ore demand might increase in the next six months on the back of Chinese infrastructure spend.

The price of Anglo Platinum appears to have absorbed the impact of the prolonged strike within the sector which catalysed a 40% drop in platinum production. Half year results showed sales to have remained in line with the 2013 comparative reporting period although earnings declined by around 65%. Anglo American Plc witnessed impacted of lower earnings from platinum and iron ore offset by improved earnings from copper and diamond sales. For a summary of Anglo American Plc interim results please see article.

Earnings focus

Anglo American Plc released its interim results today. The group’s revenue fell from $16.144 to $16.193 billion, see the full analysis of Anglo’s results.

Apple released their 3rd quarter earnings this week. Historically Q3 earnings for Apple are relatively subdued ahead of the 4th Quarter, which sees new product models released. Q3 2014 was a record, with revenue being 5.9% higher than last year’s comparative quarter.

Twitter is expected to release its 2nd quarter earnings on Tuesday 29 July. The social company is expected to report a loss of $0.01 on revenue, read more about Twitter's upcoming results and take advantage of our extended trading hours on key US stocks.

Source: Bloomberg

 

Broker consensus

Brokers view on the markets.

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Broker consensus

Source: I-Net Bridge, as of 25/07/2014

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