MARKET WRAP: JSE slips 1% in risk-off trade

The JSE edged lower on Friday, amid a risk-off tone in global markets, with Sasol leading the losses.

The petrochemical company fell 6.5% to R384.78 after reporting that development costs at its Lake Charles project in the US had once again run over budget. It did, however, say it expects headline earnings per share (HEPS) for the six months to end-December to rise by about 32% compared to the prior period.

Global sentiment was risk-off, with the US—China trade war weighing on sentiment. US President Donald Trump said on Thursday that he would probably not meet his Chinese counterpart Xi Jinping before a trade truce expires on March 1.

The all share fell 1.2% to 53,244.2 points and the top 40 1.41%. The resources index gave up 1.97% and industrials 1.34%. Platinums added 1.82%. The all share lost 1.2% for the week.

Markets were digesting President Cyril Ramaphosa’s state of the nation address on Thursday, with comments on tackling corruption as well as debt at state-owned enterprises welcomed by many analysts. The plan is to split Eskom into three units — generation, transmission and distribution — but this may precipitate a tough battle with the utility’s unionised workforce. 

While details are scarce, Ramaphosa’s speech struck all the right notes, and the government seems to be on the right track, said Old Mutual Investment Group chief economist Johann Els.

Rand hedge British American Tobacco lost 2.24% to R475, Richemont 1.63% to R91.41 and AB InBev 1.14% to R1,033.05.

Lonmin surged 8% to R11.74, despite earlier reporting that mining production fell 7% in the quarter to end-December.

Sibanye-Stillwater, which is seeking to acquire Lonmin, jumped 8.06% to R14.21. This was despite it saying its bid to halt a strike at its operations by the Association of Mineworkers and Construction union (Amcu) had been rejected by the labour court on technical grounds.

Harmony Gold rose 2.76% to R29.80, having said earlier that headline earnings per share (HEPS) would decline by as much as 97% in the year to end-December amid foreign-exchange losses and a R1bn depreciation charge at its Hidden Valley mine in Papua New Guinea.

Net1 UEPS was flat at R45.49, after saying that it swung into a basic loss per share of $0.98 in the six months to end-December, compared to the prior period’s HEPS of $0.16.

International focus remains on the issues of Brexit and the US-China trade war, although next week is busy in terms of local data. Mining, manufacturing and retail sales data for December are all due, and should give some indication of the progress of SA’s economic recovery.

Shortly after the JSE closed, the Dow was down 0.66% at 25,002.3 points, while in Europe the FTSE 100 had lost 0.28%, the CAC 40 0.27%, and the DAX 30 0.75%.

At the same time, gold was up 0.35% at $1,314.62/oz and platinum 0.13% at $799.52. Brent crude was 0.36% higher at $61.82 a barrel.

gernetzkyk@businesslive.co.za