MARKET WRAP: JSE slips amid gloomy Shoprite update

A slump by market heavyweight Shoprite pulled the JSE lower on Wednesday, but gold miners continued to find support from a rising metal price.

Global markets were mixed with traders reacting to Brexit developments after British law makers tasked UK Prime Minister Theresa May on Tuesday with wrangling further concessions on Brexit from Brussels. Analysts said this is unlikely.

Gold was at a seven-month high, having gained recently amid expectations the US Federal Reserve will retain its dovish stance in its first policy announcement for 2019, due after local markets close on Wednesday. Gold is seen as a hedge against loose monetary policy.

The all share fell 0.47% to 54,131.7 points and the top 40 0.47%. Food and drug retailers slumped 4.56% and general retailers 2.63%. Gold miners added 1.41%.

Shoprite plunged 14.21% to R153.13, having said after markets closed on Tuesday that it expected headline earnings per share (HEPS) for the 26 weeks to end-December to fall as much as 36% compared with the previous period.

Lewis gained 4.92% to R32.42, after earlier saying comparable store sales grew 6% in the quarter to end-December.

Kumba Iron Ore jumped 9.03% to R332, having now added 17.29% for the week. Iron ore prices have surged after a dam burst in Brazil disrupted production at a mine owned by Vale, the world's largest producer. Assore rose 6.09% to R338.42.

British American Tobacco added another 4.19% to R468.25, following Tuesday's 5.95% surge. The company was recently described as undervalued by a major US brokerage.

Naspers fell 1.98% to R3,023.56.

Shortly after the JSE closed, the Dow was up 0.99% to 24,826.8 points, while in Europe the FTSE 100 had added 1.54% and the CAC 40 0.76%, while the DAX 30 was down 0.2%.

At the same time, gold was flat at $1,311.09/oz while platinum was up 0.13% at $814.79. Brent crude had gained 0.93% to $61.88 a barrel.

Domestic factors were of some interest, with cabinet ministers meeting on Wednesday to discuss the future of Eskom — whose dire financial state is seen as a major threat to SA’s sovereign credit ratings. On Tuesday, it emerged that the future of the monopolistic power utility could be decided within a month.

Local data was disappointing. Annual growth in money supply  slowed to 5.6% in December, lower than the market expectation  of 5.8%. SA’s economic recovery remains patchy but this also means there are few demand-pressures to prompt rising prices, said Nedbank Corporate and Investment Banking analysts. This, along with falling energy prices, could be enough to ensure the Reserve Bank keeps interest rates on hold until November.

International focus remains on the US-China trade war, with talks between the two countries expected to conclude on Thursday.

gernetzkyk@businesslive.co.za