26 June - 3 July 2015
A 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
While global markets were initially buoyed by news that progress had been made in terms of a Greek bailout deal, gains were eroded in part by the reality that the completion thereof was far from certain.
Brait SE has soured on the gainers list, after finding itself a new inclusion in the JSE Top 40 index, which was reweighted at the close of business on Friday the 22nd of June. The company is also benefitting from the positive reactions to recently released news of its 90% acquisition of the UK clothing and footwear retailer, New Look, as well as positive results released in the previous week (NAV for FY 2015 increased by 141.4%). Market participants would have also been encouraged by the ordinary share bonus issue (with cash dividend alternative) of 77.12c per share proposed.
Resource counters have returned to dominate the decliners list as commodity prices in general were subdued as higher levels of supply continue to meet lower levels of demand with the outlook thereof remaining blurred with uncertainty. While commodity prices were generally flat to lower, the Rand managed to steady and offset some of its recent weakness further impacting the sector sentiment over the week.
|29-Jun||Alexander Forbes Group Holdings Ltd||Ex-Dividend||R0.12|
|29-Jun||Clicks Group Ltd||Ex-Dividend||R0.65|
|29-Jun||Oceana Group Ltd||Ex-Dividend||R1.06|
|29-Jun||Pioneer Food Group Ltd||Ex-Dividend||R0.95|
Source: Economic Calendar, as of 26/06/2015
South Africa recorded a current account deficit of R188675m in the first quarter of 2015. The balance of payments narrowed to -4.8% of the country’s gross domestic product (GDP) on a seasonally adjusted basis, which was an improvement from the fourth quarter figure in 2014 of -5.1% of GDP. The news catalysed minor strengthening in the rand although most of our currency’s movements can be attributed to global themes in Europe and the U.S. currently in play.
The annual percentage change in the Producer Price Index (PPI) for final manufactured goods was 3.6% in May 2015. From April 2015 to May 2015 the PPI for final manufactured goods increased by 0.8%. PPI for final manufactured goods for May 2015 = +3.6% y/y.
Greece continued to take center stage in news headlines this week as final efforts to avoid a default on the country’s debt obligations remained a key focus in Europe. Excluding the Greek debacle, services and manufacturing PMI data out of France and Germany as well as the combined Euro area were upbeat as each data point came in ahead of consensus.
In the U.S., major data releases were mixed with existing home sales coming in ahead of expectation, core durable goods data falling below expectation and the Final GDP revision coming in line with consensus at -0.2% growth q/q.
In China, HSBC Flash Manufacturing PMI data alluded to a minor industry contraction although the data was realised ahead of consensus estimates had predicted. Friday saw the Shanghai Composite fall more than 7% as the index continues to correct from the recent highs as market participants deleverage themselves from Chinese equities markets. A Morgan Stanley report suggesting that the current correction may have further to go further exacerbated weakness.
The week ahead
The new week is likely to see volatility on the rise as we await the results of, the weekends’ Euro group meetings with Greek leaders, ahead of the country’s impending IMF payment deadline. In the U.S, another round of Employment data is due out on Friday, which plays to the other key theme in markets, which is when will the U.S. start to raise rates in the world’s largest economy.
|30-Jun||16:00||USD||CB consumer confidence||95.4|
|30-Jun||08:00||SA||Money supply y/y||8.38%|
|01-Jul||03:45||CNY||HSBC final manufacturing PMI||49.6|
|01-Jul||14:15||USD||ADP non-farm employment change||201000|
|01-Jul||16:00||USD||ISM manufacturing PMI||52.8|
|02-Jul||14:30||USD||Non-farm employment change||280000|
|03-Jul||09:15||SA||HSBC whole economy PMI||50.1|
|03-Jul||11:30||SA||Business confidence index||86.9|
Source: Economic Calendar, as of 26/06/2015
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Source: INET BFA, as of 26/06/2015