JSE closes higher in relief rally as general retailers jump

The all share closed firmer on Monday in a relief rally‚ with general retailers leading the way. The gold index‚ however‚ retreated more than 4% ahead of a probable US rate hike next week.

Trading was choppy for most of the day as the market sought direction from S&P Global Ratings’ announcement on Friday‚ and Italian voters’ decision on Sunday to reject prime minister Matteo Renzi’s constitutional reform plans with a large majority‚ raising questions about Italy’s continued EU membership.

S&P lowered SA’s long-term local-currency rating to BBB from BBB+‚ while the foreign-currency rating was left unchanged at BBB-‚ both with a negative outlook.

“South Africans can head into the festive season feeling a bit more at ease‚ knowing that the country has maintained its investment grade rating‚” said Old Mutual multi-managers investment strategist Dave Mohr.

Looking to 2017‚ he said the bigger risk to local bond markets remained US interest rate developments.

“Higher US interest rates would likely result in a stronger dollar‚ which could result in a weaker rand‚ putting upward pressure on local inflation and interest rates‚” Mohr said.

The firmer rand was the main driving force on the day‚ with the local currency reaching R13.79/$ in late afternoon trade‚ thereby supporting retailers and banks.

European markets were higher following the rejection of the right-wing candidate in the Austrian presidential election and despite the turmoil in Italy.

The gold price had dropped 1% to $1‚164 an ounce in the late afternoon while platinum was 0.90% higher at $934 an ounce. Brent oil had risen 1.42% to $55.16 an barrel.

The all share closed 0.93% higher at 49‚713.60 points and the blue-chip top 40 added 0.86%. General retailers lifted 3.23% and food and drug retailers rose 2.95%. Banks added 1.95% and financials ended the day 1.06% higher. Platinums rose 0.94%‚ while the gold index slumped 4.46%.

The Dow Jones industrial average opened 0.45% higher at record levels. In European markets‚ the FTSE 100 had gained 0.29%‚ the French CAC 40 had risen 0.81% and Germany’s Dax 30 was up 1.35%.

Absa Asset Management investment strategist Errol Shear said an expected ratings downgrade had already largely been priced into markets‚ although an actual downgrade by S&P would most likely have resulted in an aggressive sell-off of the rand.

He said while it was good news that SA avoided its foreign-currency credit rating downgraded to junk status‚ all three major ratings agencies still had SA on a negative outlook. “This means a lot of work needs to be done‚ and credibility [needs] to be regained if SA is to avoid a downgrade in 2017‚” Shear said.

Among individual shares Anglo American rose 1.64% to R215.59 and Glencore added 1.67% to R49.97‚ after saying last week it would distribute $1bn to investors next year.

Sasol rose 1.75% to R366.35 on the higher oil price.

Kumba Iron Ore jumped 6.01% to R167.50.

Barloworld rose 4.15% to R109.99.

Harmony Gold fared worst in its sector‚ plummeting 7.59% to R29.20. Sibanye shed 5.69% to R27.68 and AngloGold Ashanti closed 4.05% lower at R152.80.

In the banking sector‚ FirstRand rose 2.46% to R51.16 and Standard Bank was up 1.52% to R149.15.

Shoprite lifted 3.96% to R191.02‚ Mr Price rose 4.32% to R154.50 and Woolworths was up 2.79% to R65.49.

Growthpoint stood out among larger property stocks‚ regaining 1.61% to R24.60‚ with Redefine up 0.68% to R10.37.

Life Healthcare rose 2.11% to R30.94.

Niche financial lender Finbond plummeted 13.21% to R2.30.

— TMG Digital/BusinessLive