Movements on our local bourse have been dominated by local company earnings releases and guidance, combined with risk aversion amidst geo-political unrest.
Tensions over a technical recession being realised, were abated after Gross Domestic Product (GDP) showed 0.6% growth quarter-on-quarter. The figure, although a relief from the previous quarter’s realised contraction, fell short of consensus estimates which forecast growth to have recovered to 0.9% quarter-on-quarter.
Producer Price Index (PPI) data showed inflation at a factory level to be at 8% annualised in July 2014, while the South African Reserve Bank’s leading indicator improved to a reading of 100.1 in June from 99.60 reported previously.
In Europe, the poor run of economic data from Germany continued, renewing concerns around the Eurozone’s economic health, and in turn recovery. Business and consumer climate data in Germany fell short of expectation and diminished from the previous months reading, while retail sales contracted by 1.4% month-on-month.
In the US, data has been upbeat with preliminary GDP showing strong economic growth of 4.2%. While new home sales have slowed from the previous month, pending home sales were a significant beat on consensus estimates (0.6%) showing a 3.3% increase month-on-month. Chicago PMI data, a leading indicator of economic health, alluded to industry expansion with an index reading of 64.3 which was well above expectation.
Ukrainian President Petro Poroshenko’s claims that Russian troops had entered the Ukraine as well as news that Pro-Russian rebels had increased their assertions have created a risk off scenario in emerging economies.