Weekly Market Forecast 4 – 8 April 2022

 

  • Local

Statistics South Africa (StatsSA) has reported that the official unemployment rate increased by 0.4% from the third to the fourth quarter of 2021. This brings the domestic unemployment rate to 35.3% from 34.9% previously. This is the highest unemployment rate recorded since the Quarterly Labour Force Survey (QLFS) was introduced in 2008. The unemployment rate under the expanded definition of unemployment decreased 0.4% to 46.2% in the fourth quarter of 2021 from the third quarter of 2021.

  • International

The Personal Consumption Expenditures (PCE) price index reported by the U.S. Bureau of Economic Analysis showed that inflation increased 6.4% in February 2022 from a year earlier. This figure follows a revised (lower) figure of 6.0% in January. The PCE price index is the Federal Reserve’s preferred measure of inflation and posted its strongest increase in four decades. Sustained high inflation rates point to a tighter stance by the central bank, which is currently expected to raise interest rates six more times this year in the world’s largest economy.

In the U.S., the monthly labour market report for March 2022 compared to consensus estimates compiled by Bloomberg showed the following:

– Nonfarm payrolls rose by 431,000 (+490,000 expected)

– Unemployment rate fell to 3.6% (3.7% expected)

– Average hourly earnings increased 5.6% year over year (5.5% expected)

 

  • The Rand

The rand weakened over the weekend but reached its best level against the U.S. dollar since October 2021 during the week.

The local currency has strengthened since the start of the war (Feb. 24, 2022) on higher commodity prices such as gold and platinum group metals (PGMs). However, we have begun to see some of these commodity price gains reversed in recent days.

Currently, the domestic currency appears to be pulling back from overbought territory, although the longer-term trend currently favours further appreciation against developed market currencies such as the euro, the British pound, and commodities.

  • Commodities

Oil prices have experienced a significant correction over the past week. While the Organisation of Petroleum Exporting Countries and its allies (OPEC +) decided to increase production by 432,000 barrels per day from the first of May 2022, the sharper reaction of crude oil prices was due to the news that the Biden administration intends to release more oil stocks from reserve storage.

The White House has indicated that it will buy about 1 million barrels of oil per day over the next six months. This represents about 5% of daily U.S. consumption and a total of 180 million barrels.

Iron ore prices rose to near-term highs, breaking the short- to medium-term trading range within which prices had previously moved. The price increase follows hints of further stimulus from Chinese authorities through infrastructure initiatives.

  • Companies

Northam Platinum Holdings Ltd: 1H22 results showed an 81.7% increase in diluted earnings per share over the same period last year.

EOH Holdings Ltd: in its trading statement for 1H22, expects EPS to improve to 10.00c to 16.00c compared to a loss per share of 83.00c in the same period last year.

Trencor Ltd: results for FY21 showed an increase in diluted EPS to 3.00c compared to a diluted loss per share of 22.00c in the prior year.

Barloworld Ltd: in its voluntary trading update, has forecast revenue for the five months to 28 February 2022 to be 2.3% higher than the same period last year.

Nampak Ltd: in its voluntary trading update for the five months to February 28, 2022, expects revenue growth of more than 20.0% compared to the same period last year.

ADvTECH Limited: in its FY21 results showing an increase in diluted earnings per share to 121.80c from 85.30c in the previous year.

Raubex Group Ltd: in its FY21 trading report, EPS improved to 202.00c from 87.40c in the prior year.