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
This week’s top movers list highlights a torrid week for equities in general with a sparse gainers list and abundant decliners list.
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.
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.
|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
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.
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.
|01-Jun||03:45||CNY||HSBC final manufacturing PMI||49.1|
|01-Jun||16:00||USD||ISM manufacturing PMI||51.5|
|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||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|
|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
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)
Source: INET BFA, as of 29/05/2015