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JSE investors turn to rand for direction

Port Elizabeth - Shares continued to trade aimlessly during the last week to leave main indices largely unchanged from the previous week. It seems that investors could find no reason to push shares higher, but they remained positive enough to rather risk some losses than lose out on a bit of upside.

There are more arguments for the current limbo in the market; where else can you put your money? Rising interest rates will not make investments in property more exciting and listed property funds have had a strong run already. Higher interest rates will also decrease bond prices and interest rates are still too low to make the money market exciting.

And the world seems to be impervious to any international crisis to ignite the gold price. In fact, it was quite a boring week for gold bulls. The Scots voted no, Russia didn’t send more tanks to the Ukraine, North Korea seemed to have run out of nuclear fuel, only the average number of bombs exploded in Iraq and not many missiles flying between Israel and whichever neighbour irritated them this week.

Local news was just as boring. Stats SA announced that annual inflation increased to 6.4% in August compared to forecasts of 6.3% and the Reserve Bank decided to keep interest rates steady. With the weaker rand and high inflation the new governor will probably increase rates the next time around.

A few companies announced that directors either bought or sold shares and a couple issued not-too-exciting trading updates.

Anglogold Ashanti [JSE:ANG] announced that it decided not to carry on with hiving off its SA assets into a separate entity and Clover [JSE:CLR] announced that earnings declined by some 14% in its financial year to June because it could not pass increases in input costs on to struggling consumers.

Here and there are still a few lost souls worrying about who to blame for African Bank’s [JSE:ABL] demise, while share prices of both Capitec Bank [JSE:CPI] and Finbond [JSE:FGL] continued to increase after concern about unsecured lending a few months ago saw them tumbling. There was and is little news to push shares of other banks and financial companies decidedly one way or the other.

The normal handful of shares propped the market up: Naspers [JSE:NPN] increased, as did British American Tobacco SA [JSE:BTI]. SABMiller [JSE:SAB] increased by 5% during the week as investors are readying for a take-over – either the SA-born beer conglomerate buying another large group or being bought out by another rival.

The two big cellular companies gained somewhat, while Richemont [JSE:CFR] fluctuated during the week on news that sales of luxury goods around the world is neither good nor bad.

Gold shares looked sick, as did some of the producers of base metals and minerals.

The week ahead

Stats SA will announce the producer price index for August. The so-called prices at the factory gate are bound to increase further due to the weaker rand and wage settlements significantly above consumer inflation. The PPI has been running at above 8% for the last few months and the figure for August is bound to be no different.

Stats SA will also announce the results of its latest quarterly labour survey. The figure for the state of employment in SA in the second quarter of 2014 won’t be much different from the first quarter. At the time Stats SA said that more than one third of SA’s work force (including the so-called discouraged work-seekers) was unemployed. High wage increases and slow economic growth will probably increase this figure.

Annual results for the year to June are due from Times Media Group [JSE:TMG] this week, with only a few companies left to report their results in the next few weeks.

Local markets will be closed for Heritage Day coming Wednesday, and all eyes will be on the rand for further direction going forward.

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Rand - Dollar
18.99
-0.2%
Rand - Pound
24.14
-0.1%
Rand - Euro
20.64
-0.2%
Rand - Aus dollar
12.39
+0.3%
Rand - Yen
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Platinum
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Gold
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Silver
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Top 40
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All Share
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