The Week Ahead

1 - 5 June 2015

A regular 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

 

Shares overview

Source: IG Insight, as of 29/05/2015

This week’s top movers list highlights a torrid week for equities in general with a sparse gainers list and abundant decliners list.

Top gainers

The last exclusively dedicated miner of iron ore (Kumba Iron Ore), in the Top40 index, heads up the week’s gainers, reacting to a stronger iron ore price. Despite a strengthening dollar, the underlying price of the steel making ingredient reached a three month high, following news that Chinese stockpiles are starting to contract in the near term. Sentiment around Kumba would have also benefitted from the rand, which has weakened significantly over the last few days.

Top Decliners

Sanlam is at the forefront of this week’s decliners, exaggerating weakness within the sector as it has done with gains in the past. The company announced in the previous week that it was acquiring a 40% stake in a Zimbabwean insurance firm (Masawara Investments Mauritius Ltd) for R138m. The acquisition is expected to increase the company’s emerging markets division’s footprint into the rest of Africa and provide further opportunities across Zimbabwean borders.

Anglo American Platinum and Impala Platinum have returned to their respective losing ways as dollar denominated platinum fell to its worst level since March 2015. Impala’s share price experienced a brief reprieve in the middle of the week following news that it had ended the disposal process of the Marula operation. The company has guided that shareholder return would best be obtained by optimizing the operations instead of disposing of them with the aim of reducing operating costs and growing output to 90 000 ounces per annum.

INET BFA's weekly Broker Bonsensus on the top traded shares.

Click to view this week's broker consensus

 

 

Date Company Event Amount
01-Jun Life Healthcare Group Holdings Ltd Ex-Dividend R0.68
01-Jun Raubex Group Ltd Ex-Dividend R0.36
01-Jun Sovereign Food Investments Ltd Ex-Dividend R0.34
01-Jun Transaction Capital Ltd Ex-Dividend R0.10
02-Jun Mr Price Group Ltd Full-year results n/a
05-Jun African Bank Investments Ltd Full-year results n/a

Source: Economic Calendar, as of 29/05/2015

 

Market overview

Local Data

It has been a turbulent week in financial markets with catalysts from all corners of the globe weighing on sentiment.

In China news that brokers are increasing margin requirements in terms of lending stock to investors saw the Shanghai Composite index fall more than 6% on the day. The move follows extensive gains on Asian markets witnessed over the course of the year and is an attempt to limit client risk at current market levels.

In Europe, Greece remains at the forefront of market headlines, as the country gets ever closer to the next round of debt repayments whilst not having secured bailout funding from the Troika. Negotiations between policy makers continue with Greece aiming to have an agreement in place by the last day of May 2015.

In the U.S., hawkish comments from FOMC members throughout the week saw further strength in the dollar as the prospect of tightening rates in the world’s largest economy becomes imminent. Durable goods and consumer confidence data came in line with expectation while new and existing home sales data came in well ahead of expectation. Preliminary GDP data showed that the U.S. economy contracted 0.7% (q/q) in the first quarter of 2015.

International Data

Local GDP data for the first quart of 2015 was more or less in line with consensus estimates. Growth of 1.3% q/q and 2.1% y/y was realised domestically.

Unemployment data was a disappointment as the rate climbed unexpectedly to 26.4% in the first quarter of this year.

The annual percentage change in the Producer Price Index data (PPI) for final manufactured goods was 3.0% in April 2015. From March 2015 to April 2015 the PPI for final manufactured goods increased by 0.9%.

The week ahead

The new week will commence with the monthly run of manufacturing PMI data out of China, the U.K. and the U.S. In Europe the ECB appears unlikely to announce any changes to current lending rates in place although, the press conference to follow (Wednesday) is likely to induce market volatility. Friday will see the U.S. indicate how the labour market did last month, when it releases non-farm payroll and unemployment rate data, arguably the most important data point in global markets at present.

Date Time Region Event Previous
01-Jun 03:00 CNY Manufacturing PMI 50.1
01-Jun 03:45 CNY HSBC final manufacturing PMI 49.1
01-Jun 10:30 GBP Manufacturing PMI 51.9
01-Jun 16:00 USD ISM manufacturing PMI 51.5
02-Jun 10:30 GBP Construction PMI 54.2
03-Jun 10:30 GBP Services PMI 59.5
03-Jun 13:45 EUR Minimum bid rate 0.05%
03-Jun 14:15 USD ADP non-farm employment change 169K
03-Jun 14:30 EUR ECB press conference n/a
03-Jun 14:30 USD Trade balance -51.4B
03-Jun 16:00 USD ISM non-manufacturing PMI 57.8
03-Jun 11:30 SA Business Confidence Index 89.9
04-Jun 13:00 GBP Official bank rate 0.50%
04-Jun 13:00 GBP MPC rate statement n/a
04-Jun 14:30 USD Unemployment claims 252K
05-Jun 14:30 USD Non-farm employment change 223K
05-Jun 08:00 SA Gross gold & foreign exchange reserves $47.04bn
05-Jun 08:00 SA Net gold & foreign exchange reserves $41.93bn

Source: Economic Calendar, as of 29/05/2015

 

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Broker consensus

Source: INET BFA, as of 29/05/2015

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