The JSE closed weaker on Thursday‚ but pared losses in late afternoon trade as banks‚ financials and retailers came back from intraday weakest levels on a stable rand and bond yields.
Banks were down nearly 3% on average in the morning after S&P Global Ratings had cut their counter-party credit ratings to BB+ from BBB- to keep them in line with SA’s country rating. SA was downgraded on Monday.
The rand traded largely unchanged in a narrow range at about R13.80/$ for most of the day ahead of the vote of no confidence in Parliament set for April 18‚ as well as nationwide protest marches planned for Friday.
Market sentiment remains positive on a possible removal of President Jacob Zuma in the near term‚ based on the growing groundswell of anti-Zuma sentiment‚ and despite the ANC leadership closing ranks behind Zuma after the national working committee meeting earlier in the week.
Analysts said the market was also awaiting more policy information from Finance Minister Malusi Gigaba on the newly stated policy of “radical socio-economic transformation” within the parameters of fiscal discipline and how that would be implemented.
Gold shares were in demand despite a marginally softer gold price as the US Federal Reserve sent out renewed dovish signals on rates in its minutes released on Wednesday.
The Fed’s view was in spite of US ADP employment rising by 263‚000 last month‚ from 245‚000 in February‚ well ahead of forecasts of 185‚000 and indicating continued strength in the US economy.
The Dow was 0.17% up at the JSE’s close on lacklustre trade dominating sentiment most of the week.
“The Fed minutes showed that most officials supported a policy change that would start reducing the central bank’s massive balance sheet saying that this exercise should be conducted in a passive and predictable manner‚” said analysts at Nedbank Corporate and Investment Banking.
The all share closed 0.14% lower at 52‚918.40 and the blue-chip top 40 was flat (up 0.04%). Banks were down 1.78% and property lost 0.71%. Financials shed 0.67%. Food and drug retailers were down 0.41% and general retailers ended the day 0.15% lower. The gold index gained 0.60%. Resources ended the day flat (up 0.08%).
Local market sentiment is predicted to remain cautious on continued foreign selling and further expected downgrades by rating agencies Fitch and Moody’s.
“Markets tend to react fairly swift to any downgrade announcement‚” said Denker Capital analyst Claude van Cuyck.
He said like a company‚ a country has a price and the currency is the price of the country. “If it is badly managed‚ or there is poor corporate governance‚ you would expect the market to punish the currency.”
Van Cuyck said rand-hedge shares are starting to look very attractive from a long-term perspective.
Among individual shares on the JSE‚ Kumba Iron Ore was 2.73% lower at R224.03.
Imperial Holdings dropped 1.19% to R154.93 and Grindrod lost 3.19% to R13.66.
Harmony was up 2.09% to R36.66. DRD Gold lost 2.44% to R6.81.
Lonmin closed 1.81% higher at R19.70 among platinum stocks after jumping 32.81% on Wednesday.
Among banks‚ FirstRand shed 0.82% to R44.90‚ Standard Bank was 1.64% off at R136.47 and Capitec lost 4.85% to R720.
MMI Holdings shed 1.26% to R22.01 and Liberty Holdings lost 1.04% to R99.97.
Among retailers Mr Price shed 2.1% to R148.41 and Shoprite lost 1.92% to R193.28.
Among property stocks‚ Growthpoint dropped 0.71% to R25.07‚ while Hammerson lifted 1.46% to R100.74.
Life Healthcare shed 3.44% to R25.30.
