MARKET WRAP: JSE flat as rand retreats slightly
The local currency gave up some of its recent gains despite Moody’s Investors Service saying that SA’s credit rating was safe for the moment
The JSE closed flat on Tuesday, as gains by some miners were offset by sharp losses for general retailers and banks.
There was little to give international markets direction on Tuesday, and investors seemed content about mild profit taking after a 3% jump by the banking index on Monday.
On Tuesday the all share closed flat at 57,158 points while the top 40 added 0.14%. Food and drug retailers fell 1.76%, banks 0.97% and gold miners 0.65%. Platinums added 1.04% and the resources index 0.49%.
Global markets had rallied strongly at the start of the week, after the release of positive Chinese manufacturing data. Local sentiment continues to be bolstered by a decision by Moody's Investors Service not to release a long-anticipated credit review for SA.
Moody's, however, said in a credit opinion earlier on Tuesday that SA's economic and fiscal position put it in line with other countries with a Baa3 rating — the last rung above junk status.
“We expect that the government's policies and the institutions will remain focused on addressing this trend but any reversal will be gradual at best given that social, economic and fiscal policy objectives will remain difficult to reconcile,” said Moody's lead sovereign analyst for SA Lucie Villa.
Traders said that the government's weekly bond auction was well subscribed, despite an increase in issuance by R450m to R3.3bn.
Local and global news was light, although markets were eyeing Brexit developments after the UK Parliament rejected four options for leaving the EU on Monday evening. Analysts said this increased the chances of the UK leaving the EU without a deal.
Focus this week is now expected to shift to data releases, although Brexit and US-China trade talks continue to threaten market sentiment.
Volatility in the Turkish lira is also threatening the rand, amid concern over populist policies in that country. Volatility in the lira could affect the rand, due to the effect of sentiment towards emerging markets more generally.
Shortly after the JSE closed the rand was 0.62% weaker at R14.2333/$, but is still 27c stronger than where it closed on Friday.
The Dow had fallen 0.29% to 26,281.78, while in Europe, the FTSE 100 had gained 1.07%, the CAC 40 0.31% and the DAX 30 0.7%.
Gold was up 0.27% to $1,290.80/oz while platinum was flat at $850.64. Brent crude was flat at $69.08 a barrel.
Diversified miner Anglo American rose 1.6% to R394.23.
Exxaro added 2.92% to R172.29 and Assore 1.29% to R377.03.
Rand hedge British American Tobacco gained 1.04% to R588.42 and AB InBev 0.7% to R1,192.45.
Woolworths lost 2.34% to R45.83 and Mr Price 1.66% to R193.04.
Clicks slumped 4.18% to R178.
MTN lost 1.47% to R89.99 and Vodacom 1.41% to R112.53.
Naspers added 1.26% to R3,388.