MARKET WRAP: JSE lower, with retailers again under pressure

The JSE slumped more than 1% in broad-based losses on Thursday, its worst performance in a month, amid risk-off trade on global markets.

The dollar, which is seen as a safe-haven currency, has gained this week amid concerns about slowing global growth and the uncertainty of China and the US reaching a trade deal. This put pressure on both local banks and retailers, as well as some mining stocks, which usually benefit from a softer dollar.

The all share fell 1.26% to 53,888 points and the top 40 1.34%. General retailers gave up 2.67%, food and drug retailers 2.15% and industrials 1.69%.

Earlier, German industrial production for December came in worse than expected, contracting 0.4% month-on-month, while the Bloomberg consensus forecast growth of 0.8%. The figures weighed on expectations of a tepid recovery in the eurozone, said Barclays Research analysts.

The pound firmed a little after the Bank of England (BoE) monetary policy announcement. The BoE left interest rates unchanged, with analysts citing an upbeat assessment of the country’s economic prospects as a reason for sterling strength.

UK Prime Minister Theresa May also began her trip to Brussels on Thursday, in an attempt to secure further concessions from the EU for a Brexit deal.

Locally, all eyes will be on the state of the nation address. The speech will be delivered under a cloud of corruption, maladministration, dysfunctional state-owned enterprises, an exhausted fiscus and an even more exhausted private sector, said Mercato Financial Services analyst Nico du Plessis. “The stakes are sky high and expectations even higher.”

Shortly after the JSE closed, gold was up 0.26% at $1,309.73/oz while platinum had fallen 0.66% to $800.19. Brent crude was 0.8% lower at $62.08 a barrel.

The rand was at R13.60/$ from Wednesday’s R13.54.

At the same time, the Dow was 0.7% lower at 25,213.82 points, while in Europe the FTSE 100 had fallen 0.57%, the CAC 40 1.37%, and the DAX 30 2.11%.

Rand hedge AB InBev gave up 2.02% to R1,045 and Richemont 1.8% to R92.92.

TFG slumped 4.44% to R161.52 and Truworths 5.06% to R75.05.

Sasol gave up 2.87% to R411.51.

ArcelorMittal was up 7.87% to R3.70, having earlier reported revenue growth of 16% in the year to end-December. The company reported a headline profit of R968m for the period, compared to the prior period’s R2.518bn loss.

Clover fell 4.13% to R22.05. Earlier, Brimstone Investments said it was reconsidering its part in a consortium seeking to buy Clover at R25 per share, due to protests from lobby group Boycott,  Divestment and Sanctions SA over the participation of an Israeli company.

Sappi gave up 3.74% to R72.90, extending Wednesday’s 5.1% loss. It reported then that sales in the quarter to end-December rose 28.5% to $81m compared with the previous period. Net debt in the first quarter of the paper and pulp producer’s financial year rose to $1.55bn from the previous period’s $1.34bn.

Gold Fields fell 3.09% to R48.06, extending Wednesday’s 1.59% loss when it reported that it expected headline earnings per share to fall by as much as 81% for the year to end-December.

gernetzkyk@businesslive.co.za