Global markets are being held up by strong first quarter earnings releases and US data from last week that signals US inflation is being controlled.
Over 80% of the S&P 500 has released Q1 results and 78% of them have exceeded expectations. If the trend continues it will be the highest proportion of “beats” in almost 10 years.
This earnings growth is keeping valuations in check, the S&P is on a forward PE of 16, a fraction below the 5-year average at 16.1.
Last week the Rand rallied strongly after US employment data and wage growth signalled inflation should remain within target and US interest rates will not be hiked aggressively.
This is good for emerging markets and should provide support after a brief sell off to start May.
The week ahead:
- Local economic data releases: 8/05: Gross Reserves, Net Reserves. 9/05: SACCI Business Confidence. 10/05: Mining and Manufacturing Production
- Results Due: REB (08/05); L4L, UPL (09/05); AEL, EQU, ILU (10/05); AEE, GRP, VLE (11/05)
- Ex-Dividend (08/05): ACT, ALP, NTCP, KST, ZED
Last week’s movers and shakers…
Best Performers: SNV 10.9%; CMH 6.2%; NPN 6%; NED 5.3%; EXX 5.3%
Worst Performers: SGL -17.8%; SNH -16.2%; DTC -16%; IMP -14.5%; BAT -11.8%
Other Economic data releases of interest…
- Tuesday: Inflation Report, Average Earnings Index (UK); Retail Sales (USA)
- Wednesday: ECB President Draghi Speaks (EU); Crude Oil Inventories (USA); SNB Chairman Jordan Speaks (CHF); Unemployment Rate (AUS); Annual Budget Release (NZL)
- Thursday: BOE Inflation Report, Official Bank Rate, Monetary Policy Summary (UK); CPI (USA)
- Friday: CPI (CAN)
Short term Ideas
- Netcare: Cancel Order, entry not achieved.
- Mediclinic: Trade closed for 11.7% gain in less than a month.
Long Term Ideas
- Dischem: Buy dips below R30.50 for a move above R37.00
- Shoprite: Building support above R240.00. Buy below R245.00. Target of R285.
- Anglo: 8% open gain, next resistance level at R350.
- Sasol: A break above R460 targets R490. Move stop loss to R440 for a 10% gain.
- Aspen: Accumulate on weakness below R260.
- Sygnia: Add below R12.50.
- Santova: Buy below R3.00.
- Merafe: Accumulate below R1.55.
- Jubilee: A new deal in Zambia, will see buyers come in. Speculative buy below R0.50.
- MTN: Bullish results, looking for a break above R 135,00.
- Glencore: Another dividend received. Hold
- Wescoal: Long term buy. Add below R1.80
- Naspers: Increase exposure below R3,000.