MARKET WRAP: JSE extends losing streak to third week
The JSE was flat on Friday, but ended the week down 0.54%, despite a rally by the rand after dovish commentary from US Federal Reserve chair Jerome Powell.
Losses by Naspers offset gains by diversified miners, with the latter benefiting from a higher oil price.
The rand had its best week against the dollar in three, having gained 1.26% by the JSE’s close, as emerging-market currencies were buoyed by expectations of a drop in US interest rates. This has helped entrench market expectations that the Reserve Bank will cut rates next week, something that should support local banks and retailers.
Markets are now pricing in a 17.5% chance of the Fed cutting interest rates by 50 basis points (bps) at their July 31 meeting, and an 82.5% chance of a 25bps cut.
The market may increasingly price in a 50bps cut, and all that stands in the way of this is US economic data between now and the Fed meeting, said Vanguard Markets managing partner Stephen Innes.
Naspers lost 1.68% on Friday, and 2.19% for the week, tracking losses in Hong Kong-listed subsidiary Tencent.
Tech stocks were under pressure during the week, amid a stand-off between Japan and South Korea, with the former restricting some key technology components to the latter, amid a spat over compensation for Second World War era forced-labour victims.
Oil was near a six-week high, as a tropical storm in the Gulf of Mexico led producers to cut production.
The all share closed flat on Friday at 57,277.3 points while the top 40 was also little changed. Gold miners fell 1.02% and industrials 0.37%. The resources index added 0.55%.
Gold was up 0.43% to $1,409.53/oz and platinum 0.5% to $828.34. Brent crude was 0.13% higher at $66.78 a barrel.
The Dow was up 0.52% at 27,232 points; in Europe, the FTSE 100 was flat, the CAC 40 had added 0.24%, while the DAX 30 was down 0.11%.
Diversified miner Glencore gained 1.25% to R46.95. Pan African Resources jumped 8.24% to R1.97. It said earlier that gold production increased by 54.1% in the year to end-June.
Woolworths gained 0.28% to R53.10, following Thursday’s 7.86% surge, which came after a trading update in which the retailer said that group sales in the year to end-June rose 5.9% thanks to its SA food business.
Rebosis slumped 10.53% to 68c. It said earlier that it had entered into seven separate sales agreements to dispose of its 49.35% stake in New Frontier properties, being of the opinion that this holding is one of the reasons for the company’s declining share price.
Steinhoff International jumped 13.39% to R1.44. It said earlier its losses dropped to €571m (R9bn) in the six months to end-March, from €609m a year before.
All eyes next week are on the Reserve Bank interest-rate decision on Thursday, although retail sales numbers for May are due on Wednesday. The consensus of a Bloomberg poll of 17 analysts is that the Bank will cut interest rates by 25bps.