BHP likely to rally JSE
BHP’s share price jumped nearly 4% in Sydney after the mining group released better than expected production report — a good augur for the JSE on Wednesday.
BHP accounts for 10.16% of the JSE’s top 40 index, tying in second place with Richemont and behind Naspers, which accounts for 22.45%.
BHP closed 0.64% higher at R283.65 on the JSE on Tuesday, helping halt a four-day losing streak of the resources 10 index, which in turn dragged the all share index down.
Tencent was up 0.7% to HK$378.40 in Hong Kong, indicating Naspers will continue Tuesday’s rebound which took it 2.13% higher to close at R3,371.90.
The rand was trading at R13.29 to the dollar, R15.48 to the euro, and R17.42 to the pound at 6.35am.
June’s inflation figures will be reported at 10am, giving a clue as to the Reserve Bank’s interest rate announcement at 3pm on Thursday.
Statistics SA is expected to report that inflation, as measured by the annual change in the consumer price index, accelerated to about 4.8% in June from 4.4% in May.
Reasons for inflation accelerating in June include 82c/l petrol price and 85c/l diesel price increases. In June the rand also weakened from R12.45 to nearly R14 to the dollar.
Investec Bank forecasts inflation will gradually rise to the Reserve Bank’s 6% ceiling by about March 2019.
“We continue to expect no change in interest rates at the July monetary policy committee meeting, given also that the rand has strengthened back materially from its weak point this year reached recently in June, as markets factored in little likely impact on US GDP growth from the escalation in global trade tensions,” Investec economist Annabel Bishop said in a preview of Thursday’s interest rate announcement, e-mailed on Monday.
“With risk-off having moderated somewhat, March 31 to date shows foreigners have sold only R1.6bn of SA equities and bonds.
“Indeed, the Reserve Bank is unlikely to enter an aggressive rate hiking cycle, and the South African forward rate agreement curve shows the markets are not anticipating an interest rate increase.”
Stats SA will release May’s retail trade sales figures at 1pm, which according to the economists’ consensus will show annual retail sales growth accelerating to about 0.8% from April’s 0.5%.
Investec Bank economist Lara Hodes, however, forecasts May’s retail growth will slow to about 0.2%, based on the results of the Bureau of Economic Research’s second quarter retail survey.
“Results from the survey suggest that business conditions in the retail sector deteriorated during the second quarter, with realised activity indicators coming in much weaker than expected.
“The consumer demand environment remains constrained, weighed down by lacklustre household credit growth, increased consumer taxes and surging fuel prices,” Hodes wrote in her weekly economics note e-mailed on Friday.
“Additionally, unemployment levels remain unsatisfactory and household debt as a percentage of disposable income has lifted, from 71.2% to 71.7%.”