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PSG daily investment update 17 May 2019
Date: 17 May 2019 Category: Stock Market |
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In our continued efforts to give our readers a broad number of views, opinions and information, we continue to provide PSG's daily market updates and add our own daily rant at the end.
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Short summary of PSG's market commentary for 17 May 2019
South Africa
The JSE pushed higher on Thursday shrugging off the continued tit-for-tat trade tariff battle between Washington and Beijing. Shortly after the closing bell, the All Share had gained 0.88%.
United States
US stock index futures climbed on Thursday following the release of positive earnings from Cisco and Walmart, somewhat easing concerns over the US-Sino trade war which continued to wreak havoc on global markets. At 19h00, the Dow Jones had gained 1.02%.
Europe
European shares pushed higher on Thursday while the euro advanced in a choppy session as auto tariffs were deferred. At 18h45, the pan-European Stoxx 600 had gained 1.27%.
Hong Kong
After Washington imposed steep sanctions on Huawei, a major Chinese telecommunications company, Hong Kong stocks failed to record gains on Thursday. At 18h50, the Hang-Seng was flat at 0.01%.
Japan
Poor economic data from two of the world’s biggest economies dragged the Nikkei into negative territory on Thursday amid soured global sentiment, while feeble earnings reports weighed on banks. At 18h50, the Nikkei had lost 0.63%.
Rand
The rand held its nerve in the face of major global currencies on Thursday afternoon as market participants awaited new catalysts from the infamous trade war and President Ramaphosa’s new cabinet. At 18h30, the rand traded at R14.20 against the dollar.
Precious metals
Immense pressure from a technical stock sell-off dragged gold prices into negative territory on Thursday as US sanctions on Huawei reduced demand for riskier assets. At 18h20, spot gold was up trading at $1 286.18 an ounce.
Oil
Oil prices climbed for a third consecutive day on Thursday as supply disruptions persisted amid ongoing tensions in the Middle East. At 18h30, a barrel of Brent crude was trading at $73.35
The JSE pushed higher on Thursday shrugging off the continued tit-for-tat trade tariff battle between Washington and Beijing. Shortly after the closing bell, the All Share had gained 0.88%.
United States
US stock index futures climbed on Thursday following the release of positive earnings from Cisco and Walmart, somewhat easing concerns over the US-Sino trade war which continued to wreak havoc on global markets. At 19h00, the Dow Jones had gained 1.02%.
Europe
European shares pushed higher on Thursday while the euro advanced in a choppy session as auto tariffs were deferred. At 18h45, the pan-European Stoxx 600 had gained 1.27%.
Hong Kong
After Washington imposed steep sanctions on Huawei, a major Chinese telecommunications company, Hong Kong stocks failed to record gains on Thursday. At 18h50, the Hang-Seng was flat at 0.01%.
Japan
Poor economic data from two of the world’s biggest economies dragged the Nikkei into negative territory on Thursday amid soured global sentiment, while feeble earnings reports weighed on banks. At 18h50, the Nikkei had lost 0.63%.
Rand
The rand held its nerve in the face of major global currencies on Thursday afternoon as market participants awaited new catalysts from the infamous trade war and President Ramaphosa’s new cabinet. At 18h30, the rand traded at R14.20 against the dollar.
Precious metals
Immense pressure from a technical stock sell-off dragged gold prices into negative territory on Thursday as US sanctions on Huawei reduced demand for riskier assets. At 18h20, spot gold was up trading at $1 286.18 an ounce.
Oil
Oil prices climbed for a third consecutive day on Thursday as supply disruptions persisted amid ongoing tensions in the Middle East. At 18h30, a barrel of Brent crude was trading at $73.35
Our daily update
Yesterday, Dis-chem published their results for the financial year, and according to the group, industrial action towards the end of 2018 had a significant impact on their financial results. They had the following to say regarding the industrial action in their financial results.
The industrial action that affected the Group for close to a third of the financial year, had both a direct and indirect impact on the financial performance of the Group. R50.4 million of additional direct costs were incurred, the primary contributing costs include:
- Increased investment in security at all our distribution centres, our head office and certain targeted stores to ensure our consumers, our employees and our assets were protected;
- Employment and training of temporary staff in our distribution centres to fill the void in the wholesale segment left by striking employees;
- Relocating head office staff to other premises to ensure their safety;
- Inability to invoice logistic fees as certain suppliers had to deliver inventory straight to stores and not through our distribution centres; and
- Related legal costs incurred. Indirect costs were estimated between R22.3 million and R26 million.
In December, which was the most impacted trading month, retail revenue growth was only 6.2% with comparable store revenue of negative 2.5%, which was well below our expectations. Although contingency plans were in place to ensure minimal disruption at our retail stores, we experienced lost opportunity sales primarily due to stock supply challenges.
Read our financial review of Dis-chem's latest results here
The industrial action that affected the Group for close to a third of the financial year, had both a direct and indirect impact on the financial performance of the Group. R50.4 million of additional direct costs were incurred, the primary contributing costs include:
- Increased investment in security at all our distribution centres, our head office and certain targeted stores to ensure our consumers, our employees and our assets were protected;
- Employment and training of temporary staff in our distribution centres to fill the void in the wholesale segment left by striking employees;
- Relocating head office staff to other premises to ensure their safety;
- Inability to invoice logistic fees as certain suppliers had to deliver inventory straight to stores and not through our distribution centres; and
- Related legal costs incurred. Indirect costs were estimated between R22.3 million and R26 million.
In December, which was the most impacted trading month, retail revenue growth was only 6.2% with comparable store revenue of negative 2.5%, which was well below our expectations. Although contingency plans were in place to ensure minimal disruption at our retail stores, we experienced lost opportunity sales primarily due to stock supply challenges.
Read our financial review of Dis-chem's latest results here
Our JSE All Share index daily performance calendar
Visit our JSE Calendar tracker page for a expanded version of the calendar below
The graphic below provides the daily returns of the JSE All Share Index (J203) on a calendar chart. Provides a great overview of the All share index over the course of the month. It will be updated daily with our daily investment update as received from PSG.
So after 4 consecutive months of positive returns on the JSE All Share Index, the month of May kicked of trading on a positive note. And then Donald Trump striked threatening to raise tariffs on billions worth of goods imported from China. China then announced a set of retaliatory tariffs on US goods. So it looks like the trade war is back into full swing. And added to that it seems like tensions between Iran and the US are escalating too, after alleged sabotage of oil container ships by Iran (in which it is alleged that drones laden with explosives flew into these container ships).
This should force up oil prices which is one thing world markets don't need as it will fuel inflation and slow global economic growth. For more on daily market movements see our 2019 Calendar tracker.
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article
This should force up oil prices which is one thing world markets don't need as it will fuel inflation and slow global economic growth. For more on daily market movements see our 2019 Calendar tracker.
But we as South African investors are losing out in Dollar terms. Largely due to continued Rand weakness not only over the short term but over the last couple of years. We continue to advise investors to take money out of South Africa and invest it offshore. Looking for ideas for investments to make? Go read this article