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Morning News 30 July 2015

Local Headlines

On Wednesday, local markets ended the session off on a high note, as local indices tracked firmer global markets, which were benefitted from risk-on trade. The resource index led the gains, up 1.8%, as Anglo American added 2.16% and BHP Billiton rose 2.27%. The industrial index was short on its heels, up 3.27%, after British American Tobacco surged 3.27%. Despite the gain in resources, the gold and platinum indices continued to fall, down 0.26% and 0.97% respectively. The biggest decliners included a 4.14% fall in Lonmin, while Amplats closed 1.53% lower. At the close, the All Share had added 1.66% to 51,598.50 points.

Selected SENS Announcements

Barclays Africa Group: In its results for the interim period ended 30 June 2015, BGA saw revenues increase by 6% to R32.4bn. This was mainly due to a 7% increase in net interest income, while non-interest income rose 4%. For the period, the group also saw credit impairments fall 1% to R3.6bn, resulting in a decrease in the credit loss ratio from 1.18% to 1.11%. Additionally, the groups Return on Equity improved to 16.4% from 16.1%, while its net asset value per share increased 6% to 9 860 cents. Headline earnings increased 11% to R6.755bn, from R6.110bn in 2014, while diluted headline earnings per share also rose 11% to 797.0 cents from 720.7 cents previously. Lastly, the group declared an interim dividend of 450 cents, a 13% increase over the previous period. British American Tobacco: In its half-year report to the end of 30 June 2015, BTI announced that group cigarette volume had declined by 2.9% to 322bn, slightly higher than an estimated industry decline of approximately 3.5%. For the period, group revenues had increased by 2.4% at constant rates of exchange. However, reported revenue decreased by 5.9% as a result of adverse exchange rate movements. Group profit from operations grew by 1.3% to £2.699bn in constant currency terms, but yet again decreased at current rates of exchange, down 4.6% to £2.347bn. As a result, adjusted diluted earnings per share, at constant rates of exchange, grew by 3.95, but declined 1.6% at current rates to 100.2p. Basic earnings per share came in 53.6% higher at 142.4p, from 93.3p in the previous corresponding period, partly due to the acquisition of Lorillard Inc. by the Group’s associate Reynolds American Inc. Lastly, the group declared an interim dividend of 49.4p, a 4.0% on 2014.

European Headlines

European markets continued to climb on Wednesday, once again supported by strong corporate results and bid activity. Among others, HeidelbergCement announced that it would attempt to take control of Italcementi. As a result, Italcementi rose 49% and HeidelbergCement dropped 6% on the news. Other events included a 6% gain in Peugeot after it reported positive 1st half net income for the first time in 4 years, while Total also gained on better-thanexpected profits. At the end of the session, the FTSEurofirst 300 index closed up 1%, while the STOXX 50 index rose 0.6%.

American Headlines

U.S. markets closed higher on Wednesday, after the U.S. Federal Reserve left interest rates unchanged. While the Fed has seen an improvement in the economy and job market, it once again confirmed that it will only raise rates once it has seen a sustained recovery in the economy. At the close, all 10 major S&P sectors were higher, with a 1.28% gain in the energy index leading the way. During the session, twitter shed 14.5% to a 1 year low, following an indication that its growth was slowing. In addition, Facebook and Whole Foods Market fell 4% and 11% respectively, after releasing their quarterly reports.

Asian Headlines

Asian markets traded mostly higher this morning after the U.S. Federal Reserve indicated that it has observed an improvement in the U.S. economy and labour market, which lifted the dollar in expectation of a rate hike before the end of the year. As a result, the Nikkei led the gains in the region, up 1.18% on a weaker yen and better-thanexpected industrial output data. In Australia, the ASX was trading 0.65% higher, boosted by an improvement in metal prices. On the mainland, the Shanghai Composite was one of the few indices to trade lower, down 0.04%, while the Hang Seng was 0.18% higher.

Commodities Headlines

Yesterday, Brent crude lost 0.2% to close at $53.38 a barrel as it recovered from Tuesday's six-month low of $52.28. Meanwhile, spot gold was hovering not far from a 5 year low this morning, after comments by the U.S. Federal Reserve indicated that a possible interest rate hike could be on the cards for either September or December. As a result, gold was flat at $1,096.75/oz, with the metal still struggling to recover above $1,100/oz following last week’s sell-off when it reached its lowest point since February 2010.

Currency Pairs

On Wednesday, the rand was slightly firmer against the dollar ahead of the U.S Federal Reserve Statement, after recovering from declines early in the morning. At 17:00, the rand was trading at R12.513/$, after touching a low of R12.596/$ at 9.30, from a close of R12.531 on Tuesday. The improving rand was partly due to the good news that South Africa’s unemployment rate had decreased to 25% in the 2nd quarter of 2015, from 26.4% previously. Following the FOMC statement, the dollar strengthened, resulting in the rand reversing its gains and weakening to reach a low of R12.574/$ this morning.

Happy Trading…

 

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