JSE slips in broad-based losses as market is unsure about Trump policy delivery

The JSE closed weaker on Monday in lacklustre trade‚ as early-morning gains among resources fizzled out in later trade on rand strength.

The rand broke through R12.90/$ again amid positive emerging-market sentiment and a weaker dollar‚ as the platinum price rose more than 1% on the day. In late afternoon trade‚ platinum was up 1.32% to $1‚040. Gold rose to $1‚258.25 while Brent crude added 0.90% to $56.45 a barrel.

The dollar weakened ahead of President Donald Trump’s address to congress on Tuesday‚ with scepticism increasing as to whether he would be able to deliver on his tax reform and infrastructural plans soon.

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The Dow was 0.19% lower at the JSE’s close with European markets also turning flat to negative. The Dow closed flat on Friday‚ and was negative for most of the day. It has recorded record gains over the past 10 sessions.

 US and many emerging markets have been trading higher since the beginning of the year on expectations that Trump’s stimulatory policies would support commodities and boost US companies.

The underlying thesis of positive markets rests on a Republican president and a Republican congress delivering on most of the promised initiatives‚ Momentum SP Reid analysts said.

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“The bullish thesis rests on the idea that such initiatives would ultimately enhance the earnings power of US corporations‚” Momentum said. The all share closed 0.22% lower at 51‚497.20 points and the blue-chip top 40 dropped 0.26%.

The gold index shed 2.85% and platinums lost 1.15%. Financials dropped 0.66% and property shed 0.38%. Banks were down 0.33% and food and drug retailers were off 0.2%. Resources ended the day flat (-0.03%). South African equities have received little support so far from last week’s budget‚ with the rand and bonds the main beneficiaries.

That is despite growing optimism that SA may escape a downgrade this year. Old Mutual chief investment strategist Dave Mohr said as long as local economic growth improved over the short term‚ and provided there was no institutional deterioration‚ SA could hold on to its investment-grade rating.

“That would be a positive surprise‚ given that global market pricing places SA in the same camp as other junk economies as Russia and Brazil‚” he said. Mohr said the position of Finance Minister Pravin Gordhan remained a key uncertainty.

• Bourse set for first monthly declineResources stocks came off the boil on the JSE on Friday, setting the All Share index on course for its first monthly decline of the year, amid low commodity prices. 

“It has drained business and investor confidence over the past 14 months‚” Mohr said. Among the big miners‚ Anglo American closed 1% higher at R204.12. Glencore rose 0.44% to R52.13. Kumba Iron Ore jumped 5.33% to R217.55. Sasol closed 1.24% up at R375.

The oil and chemical giant reported on the day that interim headline earnings per share (HEPS) to end-December dropped 38% to R15.12. Bidvest dropped 1.02% to R163.31. The group said interim HEPS to end-December rose 4.4%.

 Among gold stocks‚ Gold Fields dropped 4.23% to R41.17. Sibanye was 2.9% lower at R27.77. Impala Platinum was 3.52% lower at R43.90. Among banks‚ Barclays Africa dropped 0.90% to R154.80. Capitec lifted 0.62% to R730.

Liberty Holdings was down 1.29% to R114.01. The financial group reported a double-digit drop in annual earnings last week. Among property stocks Growthpoint was 0.67% lower at R26.74. Hyprop added 0.18% to R124.22. New Europe Property Investments lifted 0.61% to R150.70. Steinhoff jumped 2.4% to R70.90‚ and Naspers lost 0.5% to R2‚133.02.

- TMG Digital/BusinessLIVE