JSE likely to join global US midterm election celebration
How much SA’s mines recovered in September from August’s output crash and whether factories continue to grow will be revealed on Thursday
The JSE is likely to join global markets on Thursday cheering the US opposition party winning the majority of seats in the House of Representatives.
Asian markets took their cue from Wall Street where the Nasdaq composite index rose 2.64% and the S&P 500 index rose 2.12%.
The rand strengthening under R14/$ on Wednesday reduced the US stock rally to a 0.26% rise to R39.13 for Coreshares’s S&P 500 index tracker.
The rand held on to its gains on Thursday morning after strengthening to R13.89/$ overnight. The rand was trading at R13.93/$, R15.92/€ and R18.29/£ at 6.30am.
Hong Kong’s Hang Seng index was up 0.96%, helped by Naspers’s main asset Tencent rising 1.91% to HK$299.
Thursday is a busy day on both the economic data and JSE results fronts.
Stats SA is scheduled to release September’s mining production and sales report at 11.30am and manufacturing production and sales at 1pm.
The consensus of a poll of economists by Trading Economics is that SA’s mining output will rebound to a small annual growth in September from August’s 9.1% crash.
Investec Bank economist Lara Hodes is more pessimistic than the consensus, forecasting a 4% annual decline in mining production for September.
“Waning commodity prices as indicated by the Economist base metals index, which is down around 14% since January 2018, continues to weigh on production. Additionally, SA’s mining sector remains plagued by many challenges, including access to, and rising costs of key inputs,” Hodes wrote in her weekly note e-mailed on Friday.
Hodes forecasts that September’s manufacturing production will show a rebound to about 1.7% from the 2% contraction Stats SA reported in September 2017.
“Advance indications provided by the Bureau of Economic Research’s September and October purchasing managers index (PMI) readings do not bode well for the manufacturing sector in the short term. That is, the PMI fell further in October to 42.4 from September’s already-subdued level of 44.5,” Hodes wrote.
“New sales orders continued to slide, while business activity remained muted. This is indicative of a subdued domestic economy, characterised by mounting supply-driven inflationary pressures and muted local activity. The domestic situation is further constrained by faltering global trade conditions, which undermine export growth.”
Construction group Stefanutti Stocks said on October 10 it expected to report on Thursday its interim headline earnings per share (HEPS) for the six months to end-August would rise by up to 55%.
Stefanutti said this was partly due to a change in accounting standards. Under the old accounting rules, the rise in HEPS would be capped at about 43%.
Argent Industrial issued a trading statement at 4.50pm on Wednesday saying it expected to report interim HEPS growth of up to 70% for the six months to end-September.
Ayo Technologies warned shareholders on Tuesday its HEPS for the year to end-September would be about 80% lower than forecast in its prospectus before its initial public offering (IPO) in December.