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Markets: All eyes on the upcoming EU referendum vote

A look at last week’s market movements.

Global markets were once again on the back foot last week, as uncertainty relating to the upcoming EU referendum caused investors to err on the side of caution.

shaun 1

Source: IG

Weekend polls, suggesting an improved probability of the UK voting to stay part of the EU, have however seen the early part of the new week offset the short-term losses.

A summary of last week’s economic catalysts follows:

International data

In China, industrial production figures were in line with consensus estimates showing year-on-year (y/y) growth of 6%.

The Bank of Japan (BOJ) decided not to add any further stimulus measures to the Japanese economy at the conclusion of its monetary policy meeting on Thursday.

In the US the Federal Open Market Committee (FOMC) left lending rates unchanged. The decision was not unexpected, after the recent poor non-farm jobs report and economic uncertainty relating to global growth as well as the upcoming EU referendum and its potential implications.

Commodities

shaun 2

Source: IG

Crude oil has reversed its recent fortune moving from the relative outperformer in the commodity space to significant underperformer in the week gone by. Brent crude declined for six straight days before rebounding into the Friday trading session.

Speculation that US oil production could be set to rise amidst more favourable pricing has been among the major catalysts for the move. Crude oil prices have nearly double in the year thus far from their respective worst levels in January 2016.

Local data

Retail trade sales increased by 1.5% y/y in April 2016. The highest annual growth rates were recorded for retailers in pharmaceuticals and medical goods, cosmetics and toiletries (8%).

Motor trade sales increased by 9% y/y in April 2016. The largest annual growth rate was recorded for used vehicle sales (20.3%)

Wholesale trade sales increased by 5.7% in April 2016 compared with April 2015. This followed month-on-month changes of 0.8% in March 2016 and 2.9% in February 2016.

 

21-Jun

Tentative

EUR

German Constitutional Court Ruling

 

21-Jun

11:00am

EUR

German ZEW Economic Sentiment

6.4

22-Jun

10:00am

ZAR

CPI m/m

0.80%

22-Jun

10:00am

ZAR

CPI y/y

6.20%

22-Jun

4:30pm

USD

Crude Oil Inventories

-0.9M

23-Jun

2:30pm

USD

Unemployment Claims

277K

23-Jun

All Day

GBP

EU Referendum Vote

 

24-Jun

10:00am

EUR

German Ifo Business Climate

107.7

24-Jun

2:30pm

USD

Core Durable Goods Orders m/m

0.40%

 

The rand

shaun 3

Source: IG

Movement on the rand was relatively muted in the week, although on the whole, the local currency managed to etch out marginal gains against its major forex peers. News that the current account deficit had moved to -5% of GDP in Q1 2016, might have prompted sentiment of a further rate hike to ensue from the South African Reserve Bank at the next Monetary Policy Committee meeting.

The pound and euro currencies remain vulnerable to the upcoming EU referendum vote, while dovish sentiment from the FOMC rates meeting might have contributed to the slightly softer dollar.

Companies

Broad-based selling on our local equity market was the order of the week with only the SA Healthcare index managing to produce modest gains.

shaun 4

Source:IG

The sector would have been buoyed by Aspen Pharmacare which continued to gain following news that its wholly-owned subsidiary, Aspen Global Incorporated, has signed an agreement with AstraZeneca AB and AstraZeneca UK whereby it will acquire the exclusive rights to commercialise AstraZeneca’s global (excluding the US) anaesthetics portfolio.

A summary of last week’s corporate news on our local equity market follows:

Naspers: released a trading statement for FY16, guiding that the company expects core headline earnings per share to be between 15% and 20% higher than the previous year.

Steinhoff International Holdings NV: The retail holding company confirmed that it is considering a possible offer for the entire issued share capital of Poundland Group.

Bidvest Group placed 18,419,929 BidCorp ordinary shares with qualifying institutional investors at a price of R235 per share. The placing price represented a discount of 6% to the closing price of BidCorp ordinary shares on June 14 2016.

Northam Platinum: The platinum producer announced that underground operations resumed at the Zondereinde mine

Brait SE FY16 results revealed NAV to have increased to R136.27 per share from R77.12 per share in the previous year.

PPC interim results revealed headline earnings per share to have declined by 11.9%.

Pick n Pay Stores announced that it has decided to restructure its pyramid control structure by unbundling Pick n Pay Holdings RF’s approximately entire 52.7% shareholding in Pick n Pay Stores to shareholders of Pick n Pay Holdings on a pro rata basis.

This week the following results are expected:

 

2016/06/20

HCI: Ex Dividend 1.50 ZAR

2016/06/20

MR Price Group: Ex Dividend 4.19 ZAR

2016/06/20

Tongaat Huletts: Ex Dividend 0.60 ZAR

2016/06/20

Vodacom Group: Ex Dividend 4.00 ZAR

2016/06/22

Keaton Energy Holdings: Q4 2016 Earnings Release

2016/06/24

Naspers: Q4 2016 Earnings Release

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