JSE closes flat as retailers and banks retreat amid ‘eerie calm’ in markets
The JSE closed flat on Wednesday as banks and retailers were sold off in risk-off trade, with Naspers and gold stocks rising in erratic trade.
Focus was on market heavyweight Naspers after its Chinese internet investment Tencent, of which it owns 34%, reported strong results with first-quarter profit jumping 58% to $2.1bn year on year.
Shares in Naspers, which now has a R1.19-trillion market cap, closed 2.06% higher at R2,725, just missing its previous record of R2,750 reached last week.
After a promising opening, the market was hit by risk aversion near the close with the Dow Jones industrial average opening more than 1% lower on renewed jitters surrounding the troubled presidency of Donald Trump.
European markets were also lower with the Paris CAC 40 down 1.50%, Germany’s Dax 1.24% and the FTSE 100 0.41%.
The latest Trump controversy relates to Russian leader Vladimir Putin offering to release a recording of the conversations between Trump and the Russian foreign minister and Russian ambassador in the US at last week’s White House meeting. Trump has been under fire following reports in The Washington Post that he divulged intelligence secrets to the Russians, now said to have emanated from Israeli sources.
The Japanese yen and US treasuries were the main beneficiaries of the latest bout of risk aversion, with the yen gaining more than 1.5% on the greenback. Yields on the 10-year US bond fell sharply with gold also gaining 1.8% to $1,259 an ounce in safe-haven trade.
Old Mutual Equities boutique head Peter Linley said markets had been in an "eerie state of calm" following Trump’s controversies, as well as against the background of unnerving geopolitical events and disappointing US data. "The ultra-low volatility index has been a source of bemusement," Linley said.
Local retail sales for March, although better than expected, added to the woes in the sector as the prospects for the rest of the year do not look positive. Retail sales in March were 0.8% higher than the same month in 2016.
Stanlib economist Kevin Lings said the risks in the sector were firmly to the downside, including weak confidence, higher taxes, and the delayed effect of recent interest-rate increases. "Worryingly, in the first three months of 2017, retail sales fell by a substantial 1.1%, which is the worst quarterly performance in retail sales since the global financial crisis," Lings said.
The all share closed 0.04% weaker at 54,001.90 points and the blue-chip top 40 added 0.16%. General retailers shed 1.89%, banks 1.76%, financials 1.02%, food and drug retailers 0.95%, and property 0.90%. The gold index jumped 4.32% and resources were 0.46% higher.
Bidvest was down 1.67% to R166.93 and Barloworld 3.55% to R111.86.
AngloGold Ashanti was 5.67% higher at R156.99 and Harmony 4.11% at R31.14.
Standard Bank shed 2.33% to R146.85 and Nedbank 2.25% to R217.
Discovery ended the day 2.09% weaker at R129.58 and Sanlam shed 1.41% to R70.47.
In retailers, TFG lost 4.44% to R140.48, Mr Price 2.35% to R144.50, and Steinhoff 1.33% to R67.
Construction firm Aveng plummeted 7.31% to R5.20. The company expects headline earnings per share in the year to February to drop by more than 20% from a year ago.
Growthpoint lost 1.02% to R25.14 and Hyprop 1.91% to R119.96.
Famous Brands closed 2.96% lower at R133 and Spur 3.22% to R30.10.
Education group Curro shed 3.17% to R42.70.