MARKET WRAP: JSE edges down ahead of Reserve Bank decision

The JSE edged lower on Friday, bringing its total weekly loss to 2.25%, as markets continued to grapple with the uncertainty around Brexit negotiations.

Investors are bracing for the prospect of an economically damaging departure of the UK from the EU, which put significant pressure on local stocks with British exposure on Thursday.

Investors are still waiting for further developments as Tory party members mull the future of UK Prime Minister Theresa May, but the pound managed to firm a little after a 3% drop on Thursday.

Miners were a bit of a boost, however, amid signs the US and China were gearing up to bury the hatchet over trade.

The all share fell 0.1% to 52,096 points and the top 40 0.17%. Food and drug retailers lost 1.92% and property stocks 1.28%. Platinum miners jumped 4.99%.

Focus next week will be on the South African Reserve Bank, which will announce its latest stance on monetary policy on Thursday. The consensus forecast, according to Bloomberg, is that the Bank raise interest rates 25 basis points to 6.5%, although some analysts differ.

Weak economic growth and fading inflationary pressures would likely prompt the Bank to keep rates unchanged, said Capital Economics senior emerging markets economist John Ashbourne.

"Indeed, inflation will soon peak, and remain well within the SA Reserve Bank's 3%-6% target range. Given weak economic growth, we think that policy makers will opt to keep their key rate on hold next week. If we’re right that inflation will ease significantly over the next 6-9 months, rate cuts might be back on the agenda by the end of next year," he said.

Rand hedge British American Tobacco slumped 5.91% to R486.91, the group lost 22.29% during the week, battered by reports that US regulators were considering banning the sale of menthol cigarettes.

Netcare firmed 1.89% to R24.79  after warning after markets closed on Thursday that it expected its UK subsidiary, BMI Healthcare, to drag its headline earnings per share (HEPS) down more than 60% in the year to end-September.

Astral Foods fell 4.47% to R196.92 ahead of the release of its results to end-September on Monday. The company warned in October it expected HEPS to decline by between 90% and 100%, having previously warned about the impact of "abnormally high" feed costs.

Shortly after the JSE closed the Dow was down 0.28% to 25,218.58 points, while in Europe, the FTSE 100 had lost 0.6%, the CAC 40 0.81% and the DAX 30 0.82%.

At the same time, gold was up 0.79% to $1,222.65 an ounce and platinum 0.73% to $847.45. Brent crude was up 2.05% to $68.01 a barrel.

gernetzkyk@businesslive.co.za