Following on from yesterday’s release of the CPIX statistics coming in at 10.4%, the producer price inflation (PPI) figures were released today and they rose by 12.4% year-on-year in April from 11.9% year-on-year in March. With the rising CPIX and PPI it is almost certain that the central bank will increase interest rates come June 12. With this in mind, banking stocks took a knock on the JSE today fuelled by the likelihood of an aggressive interest rate hike. The all share index lost 0.98%. Banks were the hardest hit in todays trading with Investec loosing 4.40% to close at R52.10 and FirstRand shedding 2.57% to close at R14.41. Read the rest of this entry »

We could be in for a shock come 12 June when the Monetary Policy Committee (MPC) meet to make a decision on interest rates. Reserve Bank governor, Tito Mboweni, has hinted that they may decide to increase interest rates by 200 basis points in June. This would mean that the prime lending rate from banks would be 17%. With the ever rising inflation in South Africa, the central bank has a mandate to get inflation to be between 3 – 6% and its seems that they are failing in their quest as inflation is now standing at 10.4%. Is increasing the interest rates the only solution to stopping this runaway inflation? Read the rest of this entry »

The JSE ended in the red again today largely due to the falling metal prices and the terrible inflation statistics released today. The all share index closed 0.79% lower. Resources were down 1% while the gold index slumped 2.41% and the platinum index shed 2.12%. The Banks were down 0.93%, so to were financials by 0.28%. These two sectors were not helped at all by the inflation data released today which suggests there will be an interest rate hike soon.

The rand did not show much reaction to the inflation statistics. If anything the rand actually got stronger today. By the close of the JSE the rand was bid at R7.6784 to the dollar from a previous close of R7.7212. It was bid at R12.0325/€ from a previous R12.1205 and at R15.1864/£ from R15.2440 before.

Inflation figures released today showed that the CPIX rate rose from 10.1% in March to 10.4% in April. The rate seems to be edging further and further away from the central banks target of having inflation being between 3 – 6%. This is the 13th month in a row that inflation has been outside the central banks target. Prior to the announcement, CPIX was expected at 9.9%, an I-Net Bridge survey found, with forecasts ranging from 9.8% to 10.3%. With inflation now at 10.4%, the question now is not if the central bank is going to increase interest rates in June but rather, by how much are they going to increase them? Read the rest of this entry »

It was really no surprise that the local markets slummed today after the release of GDP figures which showed that growth in the South Africa economy was slowing down. The rand slipped immediately after the release of the GDP figures. At 12:00 the rand was trading at R7.7293/$ from a previous close of R7.6810. Against other major currencies, the rand continued to soften: R12.1836/€ from R12.1270 and R15.2727/£ from R15.2158.

On the JSE, the all share index closed 0.79% in the red with the Top 40 index also dropping by 0.86%. Two telling factors for the poor performance in the markets today were the less than positive GDP figures and the weaker commodity stocks. The price of gold fell 2.16% and this resulted in the gold miner Harmony shedding 3.33% to close at R94.75. Other big loosers today were Sasol which dropped 2.77% to close at R483, BHP Biliton closed 2.09% lower to R306.21 and Anglo American lost 0.89% to close at R522.25.

Statistics released today show that the South African economy only grew by 2.1% in the first quarter of this year, compared to a growth rate of 5.3% in the fourth quarter of last year. This really comes as no surprise as the first quarter of this year has been plagued by electricity shortages in the country and ever rising interest rates. The hardest hit sector was mining which dropped 22% in the first quarter. Manufacturing also declined by 1%. These two sectors are heavily reliant on electricity and any problems with electricity supply will affect their performance. Read the rest of this entry »

The market was relatively quiet today due to it being a public holiday in the UK and USA. The JSE closed in the positive though, with the all share index gaining 0.55% at the close. Resources were up 1.35% so to were financials by 0.14%. Most eyes on the JSE today were on MTN who are still trying to sort out a possible deal with India’s Reliance Communications. MTN had initial been in talks with Bharti Airtel, also from India, but those talks have since terminated. Amongst all this uncertainty with MTN, their shares ended 5.7% lower today to close at R148.07 a share.

On the currency front, the rand was bid at R7.69/$ from a previous close of R7.67. This is an important week for the South African markets as Statistics South Africa will release the Q1 gross domestic product growth figures at 11:30 on Tuesday (27 May) and inflation figures on Wednesday (28 May). The results of these figures will go a long way to determining the market sentiment especially the inflation figures which could force interest rates to rise.