JSE closes lower ahead of S&P Global Ratings announcement

The JSE ended Thursday weaker ahead of S&P Global Ratings announcement on Friday with weaker European markets also affecting sentiment.

Oil prices continue to surge following the oil cartel Opec’s agreement to implement production cuts to boost prices. At the JSE’s close Brent crude was up 3.7% to $53.31 a barrel‚ its best level in more than a year.

S&P will be the third and the last of the three major agencies to issue its ratings guide. A downgrade by S&P is expected to have a severe effect on the rand and local markets‚ although some has already been partially priced in.

European markets were lower ahead of Sunday’s presidential election in Austria and the Italian constitutional referendum. A surge in populist sentiment would increase concern about the state of the EU‚ ahead of France’s presidential election next year.

The lower gold price resulted in a sharp retraction among gold shares‚ while platinum stocks gained despite a weaker platinum price.

The dollar showed a firmer bias against the euro as the likelihood of a US interest-rate increase this month looks increasingly likely.

The all share closed 0.56% lower at 49‚927 points and the blue-chip top 40 dropped 0.64%. The gold index shed 3.30% and resources 0.71% while platinums gained 0.58%. The SA listed property index ended the day down 0.87% while general retailers lifted 0.73%. Industrials dropped 0.59%.

The Dow Jones opened 0.28% firmer despite initial jobless claims for the week ending November 26 jumping sharply to 268‚000‚ well above consensus expectations of 253‚000‚ indicating a slightly weaker economy despite the release of stronger data earlier in the week.

By the JSE’s close the FTSE 100 had lost 1.26%‚ the Paris CAC 40 0.26% and Germany’s Dax 0.70%.

Old Mutual Investment Group boutique head Peter Brooke said there was no reason for undue pessimism on what 2017 would hold.

“The SA environment of peaking interest rates and inflation meant a more positive environment while the global environment was moving into a rising rate cycle‚” he said.

Local bonds and property stocks were set to benefit‚ with both sectors now at cheaper levels than a few months ago.

“Property‚ in particular‚ was looking good‚ with an expected real return of between 0.5% and 5.5%‚” he said.

Brooke said there was concern about an excessively strong dollar. “But fiscal stimulus in the US would be good for global equities over bonds and also added an impetus to global growth.”.

Among individual shares Anglo American was off 0.95% to R209.98 and Sasol closed 0.86% weaker at R376.10‚ despite a weaker rand and higher oil price‚ which usually supports the group’s share price.

Rand hedges were casualties on the day with British American Tobacco losing 2.6% to R761 and Anheuser-Busch InBev 3.14% to R1‚425.40.

Gold Fields fared worst in its sector‚ dropping 4.37% to R42.65 and Sibanye gave up 3.81% to R28.06.

FirstRand gained 1.27% to R51.14.

In the retail sector Woolworths added 1.39% to R65.83 and TFG was 1.11% higher at R150.

Vodacom was 1.45% lower at R142.63.

Naspers shed 0.95% to R2‚035.30.

Reinet tracked the losses in British American Tobacco‚ ending 4.19% lower at R26.50.

Clover dropped 6.09% to R18.21.

Niche financial group Finbond rallied 13.04% to R2.60.

— TMG Digital/BusinessLive