27 June 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, IG Market Analyst
The strike within the platinum sector has finally found resolve, as platinum producers and the workers union AMCU signed a wage settlement agreement on Tuesday. The strike which commenced on the 23rd of January this year holds the dubious record of being the longest and most expensive in the country’s history, costing an estimated R24bn for the platinum producers and contributing significantly to the contraction in GDP for the first quarter of 2014.
NUMSA has announced that 220 000 of its members within the industrial sector would engage in strike action from Tuesday next week, with the union looking for a 12% wage increase for workers. Another 11 000 NUMSA members are reported as being readied to engage in an unprotected strike at Eskom.
Non-farm payroll data in South Africa showed a 0.1% quarterly increase and a 0.5% annualised increase for the first quarter of 2014.
In China, HSBC Flash Manufacturing PMI data started the trading week off on a positive note. An index reading of 50.8 alluded to minor industry expansion, rather than the forecasted and previous months reading which alluded to minor industry contraction.
In the UK, current account data reflected a larger than expected deficit of GBP18.5bn while the final GDP figure was reported in line with expectation at 0.8% annualised.
In the US, final GDP data was a severe miss on consensus forecasts with a reading of -2.9% annualised. The figure was a near 2% downward revision on the advance GDP figure released earlier within the month. Durable goods and Core Durable goods orders for the previous month were also a disappointment coming in at -1% and -0.1% respectively.
Existing home sales and New Home sale showed an annualised improvement on the number of homes sold, while Consumer Confidence data implied consumer spending to be improving among households in the US.
This week, the extent of losses on the decliners list far exceeds the extent of gains on the gainers list. Broad-based weakness finds itself in a market which has been in overbought territory for a prolonged period and perhaps short-term losses are necessary for longer-term gains.
Amplats and Impala find themselves in the decliners list, despite a higher dollar denominated platinum price, and resolution to the wage negotiations which have plagued these companies for more than five months. Amplats CEO Chris Griffiths has stated that, including a two week time horizon to get production back to elevated levels, the company would have lost more than 500 000 ounces of production relating to around $1bn in lost revenue.
The wage increases will amount to between 18% and 20% for the lowest paid employees in the first year. Excluding the inactivity period over which the strike took effect, Amplats and Impala have agreed to back pay the increased salaries from July last year, while Lonmin has agreed to back-date the pay differential from October last year.
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