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Port Elizabeth - The JSE ended the week decidedly lower after the previous week’s record levels and despite quite a strong surge on Friday. It seems that shares are on the back foot for the time being with more uncertainty ahead to keep investors and speculators nervous.
The biggest event in the coming week will be the SA Reserve Bank’s monetary policy meeting which will culminate in its interest rate announcement on Thursday afternoon. There is currently little disagreement that interest rates in SA is in an upward phase – Reserve bank governor Gill Marcus has made her intention quite clear and already fired the first warning shot with an interest rate hike – but timing of the next hike is unclear.
Consumer inflation is still much higher than the target band of 3% to 6% and producer price inflation during the last few months indicated that inflationary pressures are alive and well. An interest rate hike is on the card, but not a lot of economists and the like are expecting it this week. The reason is that other economic indicators are showing that the economy is in need of stimulus rather than strict contractionary measures right now.
During the last week, Stats SA published figures that showed mining production has declined by some 6.5% during May compared to a year ago. In turn, Kumba Iron Ore [JSE:KOI] published a trading update to shareholders that earnings per share will show a decrease of around 19% when it publishes its results towards the end of the month. It blamed low export prices, which in itself gives an indication of the state of the global economy.
Stats SA also published figures to show that manufacturing output in May was some 3.7% lower than in the corresponding month last year. The outlook for the manufacturing sector does not look good as the strike by the National Union of Metalworkers of SA (Numsa) looks set to last long, given the news that the union immediately rejected the first wage offers.
A long strike will kill off whatever hope there is left of renewed economic growth.
Stats SA will this week also announce retail sales figures for SA during May, which might be further bad news, given the latest trend in new car sales which showed that consumers are cutting back on expenditure as economic austerity bites and confidence remains low.
The gold mining sector seemed to be the only sector on the JSE that seemed robust last week as the gold price remained strong in the face of the re-emergence of financial worries across the globe. Most international share markets have seen declines towards the end of the week on the news that a biggish bank in Portugal suffered losses.
Nobody really wants to think about the still-not-healthy international financial sector while considering new investments in shares.
Most gold shares picked up a few percent during the last week with Gold Field [JSE:GFI] leading the pack with an increase of nearly 7%. Anglogold Ashanti [JSE:ANG] increased by just more than 5%.
Platinum shares all declined after their relief rally in the previous week when news of the end of the strike in the platinum sector boosted sentiment. Now attention is on the hard work needed to rebuild production at businesses that has been neglected for 5 months. It is very hard to get the sophisticated refineries at platinum mines working perfectly again. In addition, the platinum price’s performance has been far from exciting.
Of interest was the large increase in the price of Pallinghurst Resources [JSE:PGL] last week. Pallinghurst holds quite large investment in platinum, but saw its share price increase by more than 5% on Friday and nearly 16% during the past week.
Other large price movements that attracted attention were in the prices of African Bank [JSE:ABL] that increased nearly 11% after the news a week ago that there is a possibility that some larger financial players are interested to make an offer to buy a large stake in the (temporary) ailing bank. The possible sale of its furniture retail interests will also raise some new capital.
The week ahead
Datatec [JSE:DTC] is set to announce its interim results, which will show how things are going with its international divisions, while Anglo American Platinum [JSE:AMS] will tell investors how things have gone there during the 6 months to end June. There is little doubt that the figures will be bad, but hopefully balanced by good news of solid plans to repair the damage brought by the strike.
Anglo American [JSE:AGL] will publish a trading statement about its activities in the second quarter of its financial year which might include some indications of the group’s plans for its platinum assets.
The biggest event in the coming week will be the SA Reserve Bank’s monetary policy meeting which will culminate in its interest rate announcement on Thursday afternoon. There is currently little disagreement that interest rates in SA is in an upward phase – Reserve bank governor Gill Marcus has made her intention quite clear and already fired the first warning shot with an interest rate hike – but timing of the next hike is unclear.
Consumer inflation is still much higher than the target band of 3% to 6% and producer price inflation during the last few months indicated that inflationary pressures are alive and well. An interest rate hike is on the card, but not a lot of economists and the like are expecting it this week. The reason is that other economic indicators are showing that the economy is in need of stimulus rather than strict contractionary measures right now.
During the last week, Stats SA published figures that showed mining production has declined by some 6.5% during May compared to a year ago. In turn, Kumba Iron Ore [JSE:KOI] published a trading update to shareholders that earnings per share will show a decrease of around 19% when it publishes its results towards the end of the month. It blamed low export prices, which in itself gives an indication of the state of the global economy.
Stats SA also published figures to show that manufacturing output in May was some 3.7% lower than in the corresponding month last year. The outlook for the manufacturing sector does not look good as the strike by the National Union of Metalworkers of SA (Numsa) looks set to last long, given the news that the union immediately rejected the first wage offers.
A long strike will kill off whatever hope there is left of renewed economic growth.
Stats SA will this week also announce retail sales figures for SA during May, which might be further bad news, given the latest trend in new car sales which showed that consumers are cutting back on expenditure as economic austerity bites and confidence remains low.
The gold mining sector seemed to be the only sector on the JSE that seemed robust last week as the gold price remained strong in the face of the re-emergence of financial worries across the globe. Most international share markets have seen declines towards the end of the week on the news that a biggish bank in Portugal suffered losses.
Nobody really wants to think about the still-not-healthy international financial sector while considering new investments in shares.
Most gold shares picked up a few percent during the last week with Gold Field [JSE:GFI] leading the pack with an increase of nearly 7%. Anglogold Ashanti [JSE:ANG] increased by just more than 5%.
Platinum shares all declined after their relief rally in the previous week when news of the end of the strike in the platinum sector boosted sentiment. Now attention is on the hard work needed to rebuild production at businesses that has been neglected for 5 months. It is very hard to get the sophisticated refineries at platinum mines working perfectly again. In addition, the platinum price’s performance has been far from exciting.
Of interest was the large increase in the price of Pallinghurst Resources [JSE:PGL] last week. Pallinghurst holds quite large investment in platinum, but saw its share price increase by more than 5% on Friday and nearly 16% during the past week.
Other large price movements that attracted attention were in the prices of African Bank [JSE:ABL] that increased nearly 11% after the news a week ago that there is a possibility that some larger financial players are interested to make an offer to buy a large stake in the (temporary) ailing bank. The possible sale of its furniture retail interests will also raise some new capital.
The week ahead
Datatec [JSE:DTC] is set to announce its interim results, which will show how things are going with its international divisions, while Anglo American Platinum [JSE:AMS] will tell investors how things have gone there during the 6 months to end June. There is little doubt that the figures will be bad, but hopefully balanced by good news of solid plans to repair the damage brought by the strike.
Anglo American [JSE:AGL] will publish a trading statement about its activities in the second quarter of its financial year which might include some indications of the group’s plans for its platinum assets.
