The Week Ahead

29 September - 3 October 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

 

View market data

Company announcements

Dividends

Economic catalysts

Market overview

Local Data

The local equity market has found itself under significant pressure this shortened trading week, largely as a result of macro-economic and geo-political developments catalysing risk aversion, most noticeably in developing markets.

The local economic calendar has been relatively light with Producer Price Index (PPI) data perhaps finding the most relevance. PPI data, for August 2014, showed year-on-year inflation at a factory level to have increased by 7.2%. The figure highlights an improvement over June and July’s figures which both showed inflation to be in excess of 8%. 

International Data

In China, HSBC Flash Manufacturing PMI data alluded to minor industry expansion with an index reading of 50.5. The market reacted negatively to comments from China’s finance minister who alluded to not wanting to implement major stimulus measures into the Chinese economy to further stimulate growth within the region.

In the US, month-on-month Core Durable Goods orders were in-line with expectation, while Durable Goods orders fell slightly short of consensus estimates. New home sales data showed 504,000 single family homes were sold in August 2014, 72,000 more than the market expected. Final quarter-on-quarter GDP data showed robust growth 4.6% out of the world’s largest economy, although in-line with the median of analyst forecasts.

In Europe, Flash Manufacturing PMI data was mixed as the French figures alluded to marginal industry contraction while German figures alluded to a marginal industry expansion. Ironically, the French manufacturing “contraction” beat consensus, while German manufacturing “expansion” fell short of consensus estimates.

Source: IG Insight, as of  26/09/2014

Top movers

Source: IG Insight, as of 26/09/2014

The lonely gainers list this week highlights a “nowhere to hide” scenario as broad-based weakness in our local market equates to what chartists may say is a “much needed” correction after being in overbought territory for a prolonged period of time. Chinese demand concerns combined with further sanctions against Russia and U.S. military action in Syria (possibly Iran), being the catalysts for this week’s risk off scenario.

Top gainers

There is very little to mention in this week’s gainers list as Aspen Pharmacare struggles to hold on to its isolated gain amongst its blue chip counterparts. Aspen remains in market favour following a positive set of results released a few weeks ago and is perhaps further benefiting from a weakened rand as nearly 80% of earnings are now attributable to offshore operations.

Top Decliners

Although losses this week have been broad-based, local miners of the steel making ingredient iron ore have borne the brunt of investor caution once again. Assore, Kumba and Exxaro (invested in Kumba’s Sishen operations and a major contributor to earnings) have headed up the decliners list as commodities remain under pressure and iron ore in oversupply.

Comments from China’s finance minister that alluded to the region refraining from using major stimulus measures to spur growth, has increased concerns around China’s slowing rate of GDP growth and in turn continuing worries over the diminishing demand for resources. Consensus estimates predict Chinese GDP to come in at 7.3%, marginally below the government’s target of 7.5%, a multi-decade low.

Continued weakness on the Rand has done little to offset the effects of commodity price weakness on local resource counters which perhaps emphasize the current degree of fear in markets

Broker consensus

Brokers view on the markets.

Click to view this week's broker consensus

 

 

Educorner

Double bottom reversal pattern

The double top double bottom reversal is a bullish pattern that can be found on bar charts, line charts as well as candlestick charts. The reversal pattern demonstrates a share’s attempt to continue an existing trend. After several attempts to move higher, the trend is reversed and a new trend begins.

The pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak in-between, often resembling a “W” for a double bottom and an “M” for a double top.

Watch the video to learn more about the double bottom reversal pattern.

Future seminars

Attend one of our free Trading strategy and Market update seminars, and with the help of our experts refine your trading strategy.

When and where

Date

Time

Location

Duration

29 October 2014 18:30 IG Offices, Johannesburg 1.5hrs
30 October 2014 18:30 Pretoria Country Club, Pretoria 1.5hrs
19 November 2014 18:30 Southern Sun Elangeni & Maharani, Durban 1.5hrs

Try our platform

Follow one of the links below for a quick look at our web-based platform and the range of markets on offer.

Domestic account

  • Explore our platform with no login
  • Search for your favourite shares and open deal tickets
  • Access charts and technical analysis tools

International account

  • Explore our platform with no login
  • Search for your favourite shares and open deal tickets
  • Access charts and technical analysis tools

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)

Broker consensus

Source: INET BFA, as of 26/09/2014

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.