finweek

In the markets: What to watch this week

It has been a long two weeks for South Africa’s financial markets. And despite a much-anticipated break over the Easter holidays, South Africans are likely to keep an ear to the ground for any political news – which could bring about more uncertainty and market turmoil.

At the same time, data that points to the health of the economy and of consumers will also be closely monitored.

Consumer confidence data, due on Tuesday, only comes out on a quarterly basis and will not reflect any of the latest political uncertainties. Yet, forecasts indicate that after the euphoria of the fourth quarter of 2016 municipal elections, realities of poor household income, weak credit extension and higher food prices are likely to weigh on consumers’ confidence in the first quarter of 2017.

Retail sales figures, to be released on Wednesday, are expected to indicate another negative figure after January’s 2.3% decline.

Production figures for the manufacturing sector will also be released on Tuesday, with production figures for mining and gold released on Thursday.

In January manufacturing production in SA increased at a rate of 0.8%, which was an improvement on the 2% decline in December. Basic iron ore and steel, nonferrous metals, metal production and machinery as well as furniture output increased at a faster pace while a recovery was recorded in petroleum, chemicals, rubber and plastic products as well as food and beverages.

Local mining production went up 1.3% year-on-year in January after a decline of 3.1% in December. January’s increase was the first in four months. Production of manganese and iron ore continued to increase faster while platinum group metals and other metallic minerals recovered. Coal declined even further from -0.1% to -5.5%. 

Other important economic announcements due this week include:
Monday
• Public speech by US Fed Chair Janet Yellen 

Tuesday
• UK Consumer Price Index

Wednesday
• US Oil Inventories

Thursday
• Chinese Trade Balance

• US Producer Price Index, Unemployment Claims and Consumer Sentiment

Friday

• US Consumer Price Index and Retail Sales

Giacomo Bonavera is head of foreign exchange trading at Capilis Asset Managers. Click here to visit the firm’s website.

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