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Morning News 23 February 2016

Local markets ended marginally higher on Monday, supported by stronger European and US equity markets. By the close of the session, the JSE All Share had gained 0.35% as it moved to trade at 49,112.80 index points, while the Top 40 added 0.5%. Resources featured amongst the front-runners during yesterday’s session, up 2.43%, following a 6.7% surge in Anglo American and a 7.83% increase in Glencore. Meanwhile, the gold index traded lower on the back of a stronger rand, down 2.25%, with Gold Fields shedding 5.44%. Lastly, SABMiller was also affected by the stronger rand, with the group ending 2.17% lower.

SENS Announcements

AngloGold Ashanti: In its results for the year ended 31 December 2015, ANG reported a significant improvement in free cash flows of $141mn, compared to an outflow of $112mn in 2014. The group was also able to reduce its net debt by 30% to $2.19bn. During the period, the ANG’s production came in at 3.947Moz, with the figure being at the upward end of the revised guidance range. Total cash costs came in at $712/oz, a 9% decrease on the previous year, while all-in sustaining costs dropped by 11% to $910/oz. Lastly, the group reported adjusted headline earnings of $49mn, up from a loss of $1mn in the previous corresponding period. Sun International: In its results for the 6 months ended 31 December 2015, SUI recorded a 10.3% increase in revenues to R5.8bn. However, despite the increase, EBITDA fell by 0.8% to R1.6bn, while the EBITDA margin declined by 3.1% to 24.7%. Following the drastically lower EBITDA and the higher depreciation and interest charges, the group reported adjusted headline earnings of R346mn. On a per share basis, this translated into adjusted headline earnings per share of 332 cents, a 19% decrease compared to a year ago. Lastly, the board saw fit to declare an interim dividend of 90 cents per share, down from 110 cents in 2014. Cashbuild: In a voluntary trading statement for the 6 months ended 31 December 2015, CSB advised shareholders that the group expects to see all forms of earnings increase by between 34% and 39%. As a result, basic earnings per share are expected to come in at between 1,104.3 cents and 1,145.5 cents, up from 824.1 cents previously. Meanwhile, headline earnings per share are expected to come in at between 1,067.7 cents and 1,107.6 cents, up from 796.8 cents in 2014. However, it must be noted that shareholders passed a special resolution on the 30th of November, whereby 200,000 shares were repurchased by the company for the Cashbuild Empowerment Trust. The related costs of the BEE transactions have been provided as a personal expense on the group’s statements. Hence, if including the once-off impact of the BEE transaction, CSB expects earnings to increase by between 0% and 5%. As a result, basic earnings per share thus only expected to come in at between 824.1 cents and 865.3 cents, up from 824.1 cents previously.

Asian Headlines

Most Asian markets traded lower this morning, despite a positive finish on Wall Street. Chinese markets once again led the losses, with the Shanghai Composite falling 1.26% to trade at just below the 2,900 point level. Also on the mainland, the Hang Seng also traded lower after yesterday’s gains, with the index having lost 0.54% at the time of writing. The Australian ASX had fallen 0.27% as most sectors traded lower. However, an uptick in the energy and material sectors limited losses. Lastly, the Japanese Nikkei featured among the top performers, with the index only having declined by 0.10% as it moved to trade at 16,094 index points.

American Headlines

US markets tracked a rally in oil prices on Monday, with all 3 major indices ending in positive territory. For the session, all 10 major S&P 500 sectors ended higher, led by a 2.23% increase in the S&P energy sector. Chevron featured among the top performers, up 2.68%, after US crude oil gained more than 6% during the session. The S&P materials index also performed well, up 1.87%, following a rebound in the price of industrial metals. At the close of the session, the NASDAQ led the gains as it added 1.47%, while the S&P 500 and Dow Jones gained 1.45% and 1.39% respectively.

European Headlines

European markets rose sharply on Monday, boosted by a surge in mining company shares. By the close of trade, both Anglo American and Glencore had gained more than 10%, after the price of copper reached a 2-week high. Despite the gains, uncertainty increased over Britain’s June 23 referendum on whether to leave the EU. The “Brexit”, as it is called by some, resulted in a slump in the pound as fears mounted that the move could damage Britain’s growth prospects. For the session, the FSTE 100 added 1.5%, underperforming a 2% jump in the DAX and 1.8% increase in the CAC. Overall, the FTSEurofirst 300 gained 1.7%, while the Euro Stoxx 50 added 2.19%.

Currency Headlines

The rand strengthened once again during yesterday’s session, despite a firmer dollar, ahead of Wednesday’s budget speech. By 17:00, the rand had strengthened to trade at R15.214/$, from a previous close of R15.414/$. However, the rand reached a session high of R15.17/$ at 19:40, before moving to trade just below the R15.22/$ level this morning. Other news included a sharp plunge in the British pound, after London’s mayor, Boris Johnson, become the most prominent politician to give his backing for Britain to leave the EU in a referendum which is to be held on the 23rd of June.

Commodity Headlines

Yesterday saw oil markets trade sharply higher, boosted by speculation regarding a drop in US production. By the close of the session, Brent crude had gained 5%, or $1.68, as it moved to close at $34.69 per barrel. However, Brent could not hold onto its gains this morning as is shed 1.41% to trade at $34.20 per barrel. In contrast, spot gold had gained 1.04% to $1,221.25/oz at the time of writing, despite opening lower. In the previous session, spot gold declined to a session low of $1,201.63/oz, down from a 1- year high of $1,260.60/oz hit earlier this month, before ending 1.6% in the red.

 

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