Markets mixed as investors await UK General Elections

Markets traded fairly mixed on Wednesday, as investors await the British general elections which are scheduled to take place on Thursday.

In a day light on impact economic data releases, we had the SACCI Business Confidence index which recorded a reduction to 93.2, from a prior recording of 94.9. The South African Reserve Bank also released the figures of its gross and net reserves, which indicated increases in both reserves.

Our local market eventually closed lower, with JSE All-Share Index closing down 0.26%, and the blue chip Top-40 index 0.18% lower. All of the major indices closed in the red, the Resources index in particular reversing after minor gains in the morning trading session closing the day 0.23% lower. Financials and Industrials followed the trend, also closing the day 0.08% & 0.22% lower respectively.

On the earnings front PPC Ltd and Steinhoff International released results today. Steinhoff results showed revenue growth of 48% for the 6 months reported, and an increase of 13% in operating profit. However earnings per share declined to 15.5 cents per share, a decrease of 3% compared to the previous period. As a result, the stock traded lower on the day eventually closing 5.67% lower, at R66.44 per share.

As most analysts expected, PPC Ltd released a relatively descent set of results which showed a decrease in headline earnings per share of 93% for the full financial year. Group revenue increased marginally by 5%, however group EBIDTA decreased by 13%. In today’s trading session the stock continued to slide and closed at a price of R5.34 per share, down 6.98% for the day. It is worth noting that their cement production capacity has increased by 33% mainly due to the commissioning of new plants in the financial year reported. This is expected to start feeding positively into the bottom line of the business in the future.

Gold started the day firm managing to reach highs of $1295.22 per ounce. There was a reversal during the course of the day after the US Dollar strengthened against major currency pairs. Gold retraced to reach intra-day lows of $1287.99 per ounce, dragging with it gold miners on the JSE. Platinum also had an intraday reversal, dropping to $946.69 per ounce before recovering slightly to trade at $951.32 per ounce at the JSE close.

This move lower in the metals was as a result of the strength that we saw in the US Dollar. The US Dollar index managed to reach highs 96.98 before stabilizing near today’s opening level of 96.58 when the JSE closed. The strength in the US Dollar was a result of the weakness in the Euro, which was caused by the ECB’s announcement to cut its inflation outlook for the Eurozone.

Brent Crude was trading flat for most of the day but quickly dropped 5% after the release of US Crude Oil Inventories late this afternoon. US Crude Inventories recorded a build of 3.29 million barrels for the first time in 9 weeks, this was on the back of an estimate of a draw of 3.14 million barrels. When the JSE closed Brent Crude was trading at $48.42 per barrel, having recovered slightly from the low of $48.15 per barrel recorded shortly before close.