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Port Elizabeth – The market was characterised by high volatility last week and it is set to continue.
The week that was
Last week sharp declines interrupted daily strong rallies in share prices. On Friday the reality of very high valuations seemed to have won over the fear of missing out on further profit and the market declined somewhat.
The declines were, nevertheless, quite modest and the JSE Top-40 index retreated by less than 0.4%. Amongst the larger index constituents that declined were BHP Billiton [JSE:BIL], which fell 2.8% during the past week, Anglo American Platinum [JSE:AMS], which dropped 3% and SAB Miller [JSE:SAB] that fell 2.4%.
AcelorMittal [JSE:ACL] ended the week just more than 1% lower after a sharp drop of nearly 6% on Friday - after the share was bolstered by very good earnings figures earlier in the week. But management warned investors that prices and volumes in the commodities markets remain weak and cost pressures are as strong as always.
It is noticeable that shares in paper and pulp producers are still continuing their upward trend with both Mondi [JSE:MND] and Sappi [JSE:SAP] adding more than 3% last week.
The cautious sentiment in the market was also evident in the banking sector.
African Bank [JSE:ABL] dropped by nearly 10% last week after the warning of more than billion rand losses due to very high levels of bad debt. Abil management increased provisions for bad debt to more than R16bn - in essence a lot of customers borrowing money and then neglecting or refusing to pay it back.
It is interesting that investors are also punishing the Abil preference share, which now offers an attractive dividend yield of 9.1%. Similar preference shares of the other banks offer yields of around 7%.
Astral [JSE:ARL] attracted attention amongst bigger risers last week with an increase of nearly 9%. It seems that investors are expecting good results when the chicken producer announces interim results within the next few weeks.
The week ahead
StatsSA will give investors and market watchers enough to mull over this week.
The counters at StatsSA will report mining output on Tuesday and retail sales figures the next day. It is bound to follow in the same vein as last week's announcement of manufacturing output and unemployment figures i.e. a bit more negative news.
Sappi [JSE:SAP] will report on its operations for the latest quarter and Nedbank will update shareholders of its first quarter of the new financial year.
Lonmin [JSE:LON] is due to publish its interim results for the 6 months to March this week which will show how platinum companies are affected by the long strike which has halted production for most of the reporting period.
The other platinum producers' financial years all end either at the end of June or December and the effect on their figures will only be seen towards the end of July when they publish their figures - or dreaded profit warnings.
Hopefully Richemont [JSE:RCH] will have some cheer for the market when it announces results for the 12 months to March. Because the world is facing hardship, even the rich have to cut back spending on Purdey shot guns, Cartier merchandise, Montblanc pens and Van Cleef & Arpels jewellery.
Datatec [JSE: DTC] usually has good news in its results - final results are due on Wednesday - which the market usually forget after a few days.
Investors and speculators can expect another volatile week which will, at least, offer them some opportunities to pick up some of the shares on their buying list at better prices.
- Fin24
The week that was
Last week sharp declines interrupted daily strong rallies in share prices. On Friday the reality of very high valuations seemed to have won over the fear of missing out on further profit and the market declined somewhat.
The declines were, nevertheless, quite modest and the JSE Top-40 index retreated by less than 0.4%. Amongst the larger index constituents that declined were BHP Billiton [JSE:BIL], which fell 2.8% during the past week, Anglo American Platinum [JSE:AMS], which dropped 3% and SAB Miller [JSE:SAB] that fell 2.4%.
AcelorMittal [JSE:ACL] ended the week just more than 1% lower after a sharp drop of nearly 6% on Friday - after the share was bolstered by very good earnings figures earlier in the week. But management warned investors that prices and volumes in the commodities markets remain weak and cost pressures are as strong as always.
It is noticeable that shares in paper and pulp producers are still continuing their upward trend with both Mondi [JSE:MND] and Sappi [JSE:SAP] adding more than 3% last week.
The cautious sentiment in the market was also evident in the banking sector.
African Bank [JSE:ABL] dropped by nearly 10% last week after the warning of more than billion rand losses due to very high levels of bad debt. Abil management increased provisions for bad debt to more than R16bn - in essence a lot of customers borrowing money and then neglecting or refusing to pay it back.
It is interesting that investors are also punishing the Abil preference share, which now offers an attractive dividend yield of 9.1%. Similar preference shares of the other banks offer yields of around 7%.
Astral [JSE:ARL] attracted attention amongst bigger risers last week with an increase of nearly 9%. It seems that investors are expecting good results when the chicken producer announces interim results within the next few weeks.
The week ahead
StatsSA will give investors and market watchers enough to mull over this week.
The counters at StatsSA will report mining output on Tuesday and retail sales figures the next day. It is bound to follow in the same vein as last week's announcement of manufacturing output and unemployment figures i.e. a bit more negative news.
Sappi [JSE:SAP] will report on its operations for the latest quarter and Nedbank will update shareholders of its first quarter of the new financial year.
Lonmin [JSE:LON] is due to publish its interim results for the 6 months to March this week which will show how platinum companies are affected by the long strike which has halted production for most of the reporting period.
The other platinum producers' financial years all end either at the end of June or December and the effect on their figures will only be seen towards the end of July when they publish their figures - or dreaded profit warnings.
Hopefully Richemont [JSE:RCH] will have some cheer for the market when it announces results for the 12 months to March. Because the world is facing hardship, even the rich have to cut back spending on Purdey shot guns, Cartier merchandise, Montblanc pens and Van Cleef & Arpels jewellery.
Datatec [JSE: DTC] usually has good news in its results - final results are due on Wednesday - which the market usually forget after a few days.
Investors and speculators can expect another volatile week which will, at least, offer them some opportunities to pick up some of the shares on their buying list at better prices.
- Fin24
