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Port Elizabeth - The theme of more-bad-news-and-new-record-highs continued on the JSE last week with the JSE Top-40 breaching a few new highs, despite everyone with a calculator and Economics 101 reducing their growth forecast.
The most important news came from rating agencies Fitch and Standard & Poor's, while the International Monetary Fund (IMF) is currently busy doing its sums. Most local economists have already started adjusting their figures downwards since the middle last year.
Only the SA Reserve Bank has kept on its brave face and continued to pacify markets by telling them that things are not totally bad. However, even the central bank has been re-looking its figures.
Reserve Bank economists will publish their Quarterly Bulletin this week, which will give pages of facts and enough figures for everybody in the markets to form their own opinion.
Last week Stats SA announced that factory output declined by 1.5% during April compared to a year ago. This was seen as much better than most forecasts, but overall still not good news.
Even the good news of a slight increase in mining production - just 0.2% - came with the qualifier that the comparative month last year were quite week.
The big problem of the strike in the platinum sector still remains. Although an agreement has been trashed out, there is still not total certainty if it has been signed and when the mineworkers will return to work. In addition, it will take affected platinum mines several months to increase production to normal levels.
Platinum shares recovered on the promise of this good news and the positive effect flowed to other mining shares. A somewhat weaker rand and indications of higher demand for commodities also helped.
Sasol [JSE:SOL] increased by nearly 6% during the week to push the share to a more deserving price/earnings ratio of 11 times after it has been stuck below 10 times while other SA commodity shares are sitting at ratings of up to 30 times.
It is noticeable that increases in the rest of the market were limited to only the large capitalisation shares, while the rest of the shares ended the week mostly lower. The couple of largest companies on the JSE, namely SABMiller [JSE:SAB], British American Tobacco [JSE:BTI] and Naspers [JSE:NPN] chalked up decent gains.
The only other ray of sunshine fell on the banking sector where most shares posted modest gains.
The week ahead
The most important event in the coming week will be the quarterly close-out of the financial futures contract on Thursday - and maybe the reason for the continued buying of index-related shares. Investors and speculators can expect a volatile week as opposite views on the market are forced to meet on Thursday afternoon to square their positions.
Figures show that large positions were already rolled over to the September contracts, but enough remain to keep the market busy, especially given the public holiday on Monday and an increase in volatility in international markets.
The market can also look forward to inflation figures for May, which will have a bearing on interest rates.
Stats SA will also announce wholesale and retail figures for April, which will give a further indication of SA’s economic health.
The progress report of Woolworths’ [JSE:WLH] bid to take over the Australian David Jones retail chain will show when Woollies’ management will need to garner shareholder approval to proceed with its proposed offer of R21.5bn to make Woolworths the second biggest retail chain south of the equator.
The most important news came from rating agencies Fitch and Standard & Poor's, while the International Monetary Fund (IMF) is currently busy doing its sums. Most local economists have already started adjusting their figures downwards since the middle last year.
Only the SA Reserve Bank has kept on its brave face and continued to pacify markets by telling them that things are not totally bad. However, even the central bank has been re-looking its figures.
Reserve Bank economists will publish their Quarterly Bulletin this week, which will give pages of facts and enough figures for everybody in the markets to form their own opinion.
Last week Stats SA announced that factory output declined by 1.5% during April compared to a year ago. This was seen as much better than most forecasts, but overall still not good news.
Even the good news of a slight increase in mining production - just 0.2% - came with the qualifier that the comparative month last year were quite week.
The big problem of the strike in the platinum sector still remains. Although an agreement has been trashed out, there is still not total certainty if it has been signed and when the mineworkers will return to work. In addition, it will take affected platinum mines several months to increase production to normal levels.
Platinum shares recovered on the promise of this good news and the positive effect flowed to other mining shares. A somewhat weaker rand and indications of higher demand for commodities also helped.
Sasol [JSE:SOL] increased by nearly 6% during the week to push the share to a more deserving price/earnings ratio of 11 times after it has been stuck below 10 times while other SA commodity shares are sitting at ratings of up to 30 times.
It is noticeable that increases in the rest of the market were limited to only the large capitalisation shares, while the rest of the shares ended the week mostly lower. The couple of largest companies on the JSE, namely SABMiller [JSE:SAB], British American Tobacco [JSE:BTI] and Naspers [JSE:NPN] chalked up decent gains.
The only other ray of sunshine fell on the banking sector where most shares posted modest gains.
The week ahead
The most important event in the coming week will be the quarterly close-out of the financial futures contract on Thursday - and maybe the reason for the continued buying of index-related shares. Investors and speculators can expect a volatile week as opposite views on the market are forced to meet on Thursday afternoon to square their positions.
Figures show that large positions were already rolled over to the September contracts, but enough remain to keep the market busy, especially given the public holiday on Monday and an increase in volatility in international markets.
The market can also look forward to inflation figures for May, which will have a bearing on interest rates.
Stats SA will also announce wholesale and retail figures for April, which will give a further indication of SA’s economic health.
The progress report of Woolworths’ [JSE:WLH] bid to take over the Australian David Jones retail chain will show when Woollies’ management will need to garner shareholder approval to proceed with its proposed offer of R21.5bn to make Woolworths the second biggest retail chain south of the equator.
