SA’s factories in the spotlight

The rand was back at R13.26 to the dollar on Wednesday morning, losing the ground gained in Tuesday’s rally, when it reached R13.08/$.

The rand was trading at R15.50 to the euro and R17.39 to the pound at 6.30am.

Apple’s 4% share price rise, to $190.29, after it released its quarterly results on Tuesday, could help buoy the JSE on Wednesday.

Apple’s rally helped Naspers’s 31%-owned Tencent to halt several days of losses. It 0.56% to HK$357.20 on Wednesday.

But Hong Kong’s Hang Seng index was down slightly as investors mulled contradicting reports on whether US President Donald Trump intends proceeding with additional tariffs or with negotiations to prevent a trade war with China.

Wednesday’s focus will be on the health of SA’s factories, with July’s Absa manufacturing purchasing managers index (PMI) and new vehicle sales, along with ArcelorMittal’s interim results.

The South African unit of the world’s largest steel maker said on July 19 it expected to report on Wednesday a swing from a headline loss to a headline profit.

ArcelorMittal said it expected to report headline earnings per share (HEPS) of between 1c and 9c for the six months to end-June, from a headline loss per share of R1.48 in the matching period in 2017.

It still expects to report a basic loss per share in the range of R1.42 to R1.52 from R2.03.

“The loss per share includes a fair value adjustment on the reclassification of the equity accounted investment in Macsteel to an asset held for sale,” ArcelorMittal said.

Investec Bank economist Lara Hodes said she expected July’s PMI to improve from June’s 47.9 points, but not sufficiently to go above the 50-point neutral level.

Details of the PMI survey are likely to continue to reflect the cost burden on manufacturers associated with rand weakness, higher fuel prices and other administered overheads, Hodes said.

Hodes forecasts annual new car sales growth to moderate to about 2% in July from June’s 3%, which was above industry expectations.

“Imported cost pressures, coupled with rising fuel costs and other consumer taxes, could impede any notable lift in new vehicle growth this year. We anticipate a further dip in export sales in July, after June’s 15.2% fall,” Hodes said.

The National Association of Automobile Manufacturers of SA (Naamsa) warned exports would suffer from the US’s protectionist policies.