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Morning News 28 August 2015

Local Headlines

The JSE All Share closed higher on Thursday, up 1.58% to trade at 49,125.10 points, in line with other global equity indices. Resources led the gains, with the index adding 5.96%, as Anglo American surged 7.83% and BHP Billiton rose 7.03%. Meanwhile, the financial index added 1.12%, as Sanlam and Old Mutual rose 2.2% and 1.98% respectively. On the downside, Naspers weighed on the index as it fell 2.29%, while EOH continued its recent declines as it shed 4.21%. Lastly, among others, Massmart rose 4.06%, Italtile gained 5% and Woolworths shed 1.52%, after all 3 companies released results during the session.

Selected Announcements

Massmart Holdings: In its results for the 26 weeks ended 28 June 2015, MSM saw sales increase by 9.1% to R38.9bn. This was mainly due to a 6.9% increase in comparable stores’ sales growth and product inflation of 3.7%. Group operating profit, excluding foreign exchange movements, grew by 12.7%, while the gross profit margin increased to 18.9%, from 18.6% previously. However, an increase in the net interest paid resulted in headline earnings declining by 3.9%. Furthermore, considering the effects of foreign exchange movements, headline earnings actually decreased by 26%. Lastly, the group declared a gross interim dividend of 146 cents per share. Woolworths Holdings: In its results for the 52 weeks ended 28 June 2015, WHL saw group sales increase by 54.9%. However, excluding the contribution made from David Jones, the increase in sales was 12%. As a result, the adjusted profit before tax rose by 20.5%, while the basic and headline earnings grew by 8.3% and 19.4% respectively. However, earnings per share declined by 3.8%, while adjusted headline earnings per share increased by 10.4%. Lastly, the group declared a final dividend 150.5 cents per share, compared to 127.925 cents in the previous corresponding period. This brings the total dividend for the period to 247 cents per share. African Rainbow Minerals: In a trading statement for the year ended 30 June 2015, ARI has advised shareholders that the group’s headline earnings were negatively affected by a decline in U.S. dollar commodity prices. However, the lower U.S. dollar prices were partially offset by a weaker average rand/U.S. dollar exchange rate. Accordingly, headline earnings per share are expected to decrease by between 56% and 60% to between 765 cents and 835 cents, from 1,900 cents previously. In addition, the basic earnings per share are expected to decline by between 96% and 97% to between 46 cents and 53 cents, from 1,521 cents. The company’s results will be released on or before the 4th of September.

European Markets

European markets ended sharply higher on Thursday, as they recouped all their losses incurred earlier this week, with gains across the board due to positive data from the United States. Furthermore, stocks were boosted by a few better-than-expected results, including Bouygues, which rose 5%, after raising its profit target. As it stands, 58% of companies listed on the STOXX 600 index have beaten or met expectations with their 2nd quarter results. At the close, the FTSEurofirst 300 index was trading 3.6% higher, while the Euro STOXX 50 index gained 3.5%.

States Headlines

U.S. markets rose sharply on Thursday, as upbeat U.S. economic data and hints that a September interest rate hike was unlikely, boosted sentiment in the market. At the close, all 10 of the major S&P sectors were trading in the black, with the energy index’s 4.9% gain leading the pack after oil prices spiked more than 9%. Apple once again provided the biggest boost to the S&P and NASDAQ as it surged 2.94%, while Tesla gained a massive 8.07% on reports that its Model S P85D received the highest possible test scores in a review. In the past 2 sessions, the Dow has gained 6.3%, the S&P has added 6.4% and the NASDAQ rose 6.8%.

Asian Headlines

Asian markets were decisively higher this morning as indices extended their recoveries into the final trading day of the week, following a strong finish from Wall Street. Japan’s Nikkei was the top performer this morning, up 2.55% as it breached the 19,000, despite some mixed economic data. On the mainland, the Shanghai Composite added 1.93%, following on from a 5.34% gain in the previous session, while the Hang Seng added 0.4%. In Australia,the ASX added 0.58%, despite erasing some of its earlier gains, as its resource-heavy index benefitted from a rebound in metal prices overnight.

Commodities Headlines

Oil prices surged more than 10% on Thursday, its biggest 1 day rally in over 6 years, as recovering equity markets and news of diminished crude supplies set off a short-covering scramble by bearish traders. At the close, Brent was trading $4.42, or 10.25%, higher at $47.56 a barrel. In addition, oil prices held onto gains this morning, as Brent gained another $0.11 to trade at $47.67 per barrel. Meanwhile, spot gold was also marginally higher this morning, but remained stuck near recent lows as it remains on track to post its biggest weekly loss in 5 weeks. Spot gold was 0.4% higher at $1,129.60/Oz, but down almost 3% for the week.

Currency Headlines

On Thursday, that rand was mostly firmer against the dollar as global currency and equity markets calmed down after recent market declines. At 17:00, the rand was trading at R13.071/$, from a previous close of R13.124/$, despite hitting a session high of R13.148/$ in risk-on trade. However, the rand weakened as the session progressed, partly due to upbeat economic data from the U.S., which could improve the odds of a September rate hike in the world’s largest economy. Data showed that the 2nd estimate for U.S. 2nd quarter GDP came in at 3.7%, up from an initial estimate of 2.3%.

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