MARKET WRAP: JSE closes lower but rand gains further on Powell testimony
The JSE closed lower on Thursday, while the Dow pushed to a record high after US Federal Reserve chair Jerome Powell’s testimony escalated expectations that the central bank may soon ease monetary policy.
At the close of the JSE, the Dow had gained 0.68% to 27,041.96 points. US markets pushed higher as investors continue to bet on a rate cut at the Fed’s next meeting in July. Markets have now pretty much fully priced in the chance of a 25-basis-point cut. Powell noted developments in the US-China trade war, concern over global growth and weak inflation as factors that may affect US monetary policy.
In Europe, the FTSE 100 had fallen 0.25%, France’s CAC 40 0.31% and Germany’s DAX 30 0.45%. Earlier, in Asia, the Shanghai Composite was little changed, while Hong Kong’s Hang Seng gained 0.81% and Japan’s Nikkei 0.51%.
Powell’s dovish tone pushed the rand to below R14/$, to its best level in five months on Thursday, at R13.8573/$. Shortly after the JSE closed, however, the rand had strengthened 0.41% to R13.9274/$ and 0.33% to R15.6831/€, while it was flat at R17.4756/£. The euro was little changed at $1,1261.
The benchmark government 10-year bond was stronger, with its yield falling eight basis points to 8.025%. Bonds yields move inversely to bond prices. It earlier broke below 8% for the first time since April 2018.
Gold had fallen 0.5% to $1,1411.70/oz and platinum 0.12% to $825.80. Brent crude was 0.5% higher at $66.98 a barrel.
The JSE all share fell 0.56% to 57,273.10 points and the top 40 0.59%. Gold miners lost 1.67% and resources 1.54%, while general retailers gained 2.61%.
Gold Fields dropped 3.43% to R74.41, Harmony 1.98% to R33.15, AngloGold Ashanti 0.86% to R253.59 and Sibanye-Stillwater 0.65% to R16.70.
Sasol fell 3.29% to R325.34.
EOH dropped 8.4% to R22.24.
Cell C’s largest investor, Blue label Telecoms, slumped 9.74% to R3.52 — its worst level in 11 years — after the former asked law firm Bowmans to investigate some of its business units, which may be involved in “irregular” practices.
Among retailers, Mr Price gained 2.01% to R197, Truworths 1.94% to R67.70 and TFG 1.56% to R183.06.
Sygnia fell 0.11% to R9.39. The financial services company said earlier that global firm Mazars would become its auditor with immediate effect.
Woolworths jumped 7.86% to R52.95, reaching a six-month high in intra-day trade after the retailer said on Thursday that its sales in the year to end-June rose 5.9%.
Altron fell 0.64% to R27.90, despite its largest investor Value Capital Partners saying on Thursday that it will maintain its holding in the technology company.
Rand hedge British American Tobacco fell 2.56% to R507.09 and AB InBev 2.29% to R1,250.73.
Statistics SA reported earlier that manufacturing production grew by 1% year-on-year in May while mining production contracted 1.5%. The Trading Economics consensus was for mining to have contracted 2.5% and manufacturing to have expanded 1.4%.
No major domestic economic data is expected on Friday but the US will release producer price index figures for June, and the eurozone industrial production data for May.