Despite good start on Friday, JSE falls flat on political and budget issues
The JSE closed flat on Friday after trading higher for most of the day, as the market followed higher global markets and the weaker rand buoyed platinums and industrials.
Platinums firmed despite a weaker platinum price, which lost 0.45% to $920.67 at the close.
Retailers extended Thursday’s losses after briefly climbing earlier in the week on positive retail sales data. Banks closed sharply lower in risk-off trade.
Rand hedges were the main volume-drivers of the day, led by Naspers, which closed at a record level. Anheuser-Busch InBev, British American Tobacco and Richemont were also in demand.
The local market shrugged off political tension and an expected disappointing medium-term budget policy statement next week, to close higher on positive global sentiment brought about by the possibility of lower taxes in the US.
Finance Minister Malusi Gigaba has the unenviable task of staying the course of fiscal consolidation at a time of dwindling revenue and funding prospects, said FNB economist Mamello Matikinca.
She said the main budget deficit was likely to widen meaningfully to 4.2% from February’s 3.9% estimate.
The rand lost 1% to R13.70/$ at the close, extending losses for the week to more than 3% after President Jacob Zuma’s unexpected Cabinet reshuffle on Tuesday, and as the dollar firmed following the passing of a budget deal in the US Senate.
The deal holds the promise that President Donald Trump’s tax reform plan will be passed by Congress, which would add further support to equity markets already trading at record highs.
The rally for stock markets since the surprise election of President Donald Trump has been driven in part by hopes that a Republican-led Congress will introduce lower taxes, seen as stimulating growth, Dow Jones Newswires reported.
The Dow was up 0.28% at the JSE’s close, building further on what was a positive week for the market, as more than 70% of third-quarter earnings numbers reported so far beat expectations.
"A failure to deliver on the promised tax reforms would be a huge blow to Trump and could be damaging for markets as well, although this now looks increasingly less likely," said Oanda trader Craig Erlam.
European markets turned flat after earlier trading higher. The FTSE 100 shed 0.06% and the CAC 40 added 0.02%.
The all share closed 0.09% up at 57,948.70 points and the blue-chip top 40 added 0.15%. Platinums rose 2.17%, resources 0.45% and industrials 0.31%. Banks shed 2.39%, general retailers 1.81%, food and drug retailers 0.99% and financials 0.80%.
The all share ended the week 0.12% up, the third week of positive gains.
After rising 2% in morning trade Anglo American ended the day 0.4% up at R255.84.
Sasol climbed 1.1% to R395.67. Brent crude was up 0.49% to $57.53 a barrel in early evening trade.
Anheuser-Busch InBev rose 1.87% to R1,724.60, British American Tobacco 1.7% to R879 and Richemont 0.07% to R122.83.
Sibanye recovered 1.98% to R17, but Harmony dropped 1.98% to R22.23.
Impala Platinum was up 2.89% to R32.72 and Lonmin 5.83% to R15.80.
Among banks Barclays Africa shed 4.13% to R140.93, Standard Bank 2.33% to R166.50 and FirstRand 2.15% to R52.79.
Discovery was down 1.64% to R144.30.
Among retailers Woolworths lost 1.28% to R57.26 and Massmart 2.22% to R110.
Dis-Chem Pharmacies added 0.03% to R32.77. After-tax profit jumped 37.4% to R409m for the six months to end-August from the matching period in 2016.
Intu Properties shed 0.95% to R39.50.
Naspers rose 1.29% to R3,297 after hitting a record R3,315 earlier in the day.
Mediclinic rose 0.49% to R115.77.
Taste Holdings shed 4.76% to 80c.