Weekly Market Update: 8 December 2014

08/12/2014

Resources continued their decline last week with Sasol suffering the impact of the ongoing slide in the oil price. Sasol was one of the worst performing shares with a drop of 7.46%; while the resource index dropped 2.84% and the Gold Mining Index declined 0.15%. As a result of oversupply in the oil market, the price of Brent crude oil reached a low of $68/barrel, with Sasol’s share price suffering a similar fate.

Other major decliners included Assore, Shoprite and Sanlam with figures of 12.64%, 8.00% and 7.46%.

On Friday, U.S. Economic data was released in the form of unemployment data and non-farm payrolls, which came out stronger than expected. This caused the Rand to weaken severely, falling to nine-week lows against the dollar on Friday as electricity supply constraints met with strong U.S. payrolls data to push it through key support levels. South Africa's currency was sold to R11.3770/$ levels, giving up 1.6% percent. It was the biggest loser in a basket of emerging market currencies trading against the dollar and tracked by Reuters.

South African economic outlook:

This week sees a slew of data coming out of South Africa. Today, the Current Account balance will be announced, while on Tuesday, gold production and mining production figures will be released. Wednesday sees the announcement of CPI figures, while PPI figures will be released on Thursday.

The FTSE/JSE Top40 closed the week -0.75% down, with the year-to-date return now at 5.77%.

Last week saw Emperor Asset Management launch its first Unit Trust. Learn about it here.The returns for Emperor’s Robert Falcon Scott Strategy (“RFS”) ended the week down 1.82%, with a cumulative return of 7.18% for the year.

Below is a summary of index returns and best and worst performing shares for RFS:

 Emperor_Headline_Indices__8_December_2014_-_Copy

This week:

The Following companies will be releasing their results:

  • Delta International Property Holdings (Quarterly)
  • Sentula Mining Limited (Interim)

In international market news:

Most major regions ended higher with the exception of Europe.These are represented by the different regions as follows:

  • Americas (S&P 500: 0.17%, Nasdaq: 0.24%)
  • Europe (FTSE 100: -0.6%, CAC 40: -0.47%, DAX: -0.36%)
  • Asia (Nikkei 225: 0.08%, Hang Seng: 0.19%)

 ECB keeps interest rates unchanged

The European Central Bank president convened his Governing Council last week, announcing that the current interest rates will prevail. Mario Draghi also alluded to the possibility of a stimulus program in order to reignite the Eurozone economy, however he failed to provide definitive details of the commencement of such a program. The euro climbed by the most in over a month, while stocks tumbled on the news.

The euro jumped from about $1.232 to a high of $1.24 - a gain of 0.8 per cent, the most since October 15 - as the governor spoke at the press conference that followed the decision to keep all the main interest rates on hold.

 Oil price continues its slide as Saudi cuts prices

Crude oil came under renewed selling pressure on Thursday after Saudi Arabia moved to cut January selling prices to customers in the US and Asia. After rising by as much as 0.7 per cent earlier in the day, Brent crude, the global benchmark for oil, fell to a fresh five year low of $69.65 a barrel. Saudi Aramco, the state-owned oil company, said in a statement that it would cut prices for all oil grades to customers in the US by between 10 to 90 cents. It also lowered prices for customers in Asia by between $1.50-$1.90

 

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