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Morning News 27 March 2015

Local Headlines

The JSE closed weaker for a 2nd straight day on Thursday, as it fell to a 2-week low on negative global developments and a warning by the SARB about possible future interest-rate hikes. Despite the SARB’s decision to keep rates unchanged, some profit-taking was evident among financials and retailers due to the more hawkish tone. Among the retail decliners, Woolies dropped 3.23% and Mr. Price shed 3.99%. Gold was the only bright spot, with the index adding 3.01%, as AngloGold and Gold Fields gained 4.08% and 3.11% respectively. The All Share was 1.36% weaker at 51‚603.9 points and the Top 40 lost 1.55%.

SENS Announcements (Selected)

Quantum Foods: In a trading statement released by QFH for the 6 month period ended 31 March 2015, the company expects that earnings per share will be at least be 25.4 cents, from a 5.7 cents loss per share in the previous corresponding period, which marks an increase of 544%. In addition, headline earnings per share are expected to be at least 25.1 cents, from 9.3 cents previously, an increase of 170%. Cognition Holdings: In its interim Results for the 6 months ended 31 December 2014, the company saw revenue decrease by 1.31% from R63.2mn to R62.4mn. In spite of this, gross profit saw an increase of 3.68% from R36.5mn to R37.8mn, resulting in an increase of 11.87% in profit before tax. Similarly, profit after tax for the period increased by 18.1% from R13.4mn in the previous corresponding period to R15.9mn in this reporting period. The total asset value of the group increased by 22.16%, while the NAV saw an 12.56% increase from 90.9 cents per share to 102.4 cents per share.

European Headlines

European stocks fell on Thursday, extending the previous session's retreat, hurt by worries over valuation levels in growth sectors such as technology following strong gains. Among others, shares in Nokia, Alcatel-Lucent, and ARM all lost between 1.9% and 4.9%. Overall, Eurozone equity indexes managed to trim their heavy losses in late trade, as the euro currency reversed gains and slipped again. At the close, the FTSEurofirst 300 ended 0.8% lower at 1,574.26 points, with the index having rallied in the past 6 months, as investors bet a sharp drop in the euro would boost the region's economy.

American Headlines

U.S. stocks fell for a 4th straight session on Thursday but indices ended well off session lows with support from economic data and earnings. Data included news that the number of jobless claims fell more than expected last week while activity in the services sector hit a 6-month high in March. Despite that, semiconductor stocks were once again under pressure as SanDisk fell 18.4% after it cut its revenue outlook. Energy stocks were also lower, down 0.2%, despite a rally in crude prices following Saudi Arabia's air strikes in Yemen. The Dow lost 0.23%, the S&P 500 lost 0.24% and the NASDAQ fell 0.27%.

Asian Headlines

Asian equities were mixed this morning, as fears over Yemen and weak data from the world's 3rd largest economy weighed on sentiment. The Nikkei was up 0.5% after the index reversed losses and moved off a 1-week low to enter positive territory, as investors engaged in bargain hunting following Thursday's losses. Panasonic jumped 4% on plans to increase M&A activity, while Nissan and Toshiba fell 1% on the back of a slightly stronger yen. The Shanghai Composite dipped 0.2% with the index resuming its decline after data showed industrial profits for the first 2 months of the year fell 4.2%.

Commodities Headlines

Gold eased this morning as traders booked profits after a 7-day rally, while the dollar rebounded on strong U.S. data. Spot gold fell 0.2% to $1,207.40/oz, after having jumped to $1,219.40 on Thursday, following a knee-jerk reaction to the strikes in Yemen. Despite the retreat from that level, gold is still set to post its 2nd straight weekly gain. Brent crude pared early gains on Thursday, but still rose more than 4% towards US$59 a barrel, as air strikes in Yemen by Saudi Arabia and its Gulf Arab allies sparked fears that escalation of the Middle East battle could disrupt world crude supplies.

Currencies Headlines

On Thursday, the rand extended losses against the dollar, despite a hawkish monetary policy statement by the South African Reserve Bank, mainly reflecting broad-based strength of the dollar against major currencies. In the end, the decision by the Reserve Bank to leave local interest rates unchanged had little influence on the rand, with the result mostly priced into the markets already. By the end of the session, the rand was trading just below the R12/$ mark, from a previous close of R11.85 on Wednesday. This morning saw little change, with the remand firming very slightly to trade at R11.992/$.

 

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