MARKET WRAP: JSE led lower by banks and general retailers
Locally, the market is anticipating the announcement of a new Cabinet and the consumer price inflation for April on Wednesday
The JSE closed lower on Tuesday, despite global sentiment improving a little after the US temporarily lifted its ban on Chinese telecoms giant Huawei.
Banks and general retailers fared worst on the day, despite a firmer rand. Both sectors are interest rate-sensitive, and Wednesday sees the release of US Federal Reserve minutes, while the the SA Reserve Bank will announce its latest stance on monetary policy on Thursday.
International sentiment improved on Tuesday following news that the US had issued a 90-day licence for US companies to continue doing business with Huawei. This follows the Trump administration’s decision last week to blacklist Huawei from the US market. The crackdown on Huawei further escalated the ongoing tension over trade between the world’s two-largest economies.
“Further customers may be lost should other countries follow the US’s decision to not use Huawei products in their networks,” said Momentum Securities equities analyst Nancy Bambo, adding that Australia, New Zealand and Japan have already banned Huawei usage from their networks.
The Shanghai Composite earlier recovered a little from its recent trade-war induced slump, closing 1.23% higher. However, Asian markets were mixed on the day.
At the JSE’s close, the FTSE 100 was up 0.3%, the CAC 40 0.38% and the DAX 30 0.87%. The Dow had firmed 0.7% to 25,862.72 points.
The all share fell 0.17% to 55,524.00 points with general retailers incurring the biggest losses, down 2.72%, followed by banks, which fell 2.01%. The top 40 was down 0.13%.
MMI gained 4.56% to R18.10, after it reported earlier that its diluted normalised headline earnings, its main earnings measure, rose 19% to R2.4bn in the nine months to end-March.
Coronation Fund Managers fell 2.69% to R50.21, after saying earlier that in the six months ended March, volatile financial markets and net outflows from institutional portfolios had weighed on its profit margin. It cut its interim dividend by more than a quarter.
Bidcorp gained 2.6% to R290.42 after the food-services company said in a trading statement that its overall results in SA for April “were much improved” compared to the previous year.
Reinet rose 1.52% to R233, despite it earlier reporting a 5.8% drop in its net asset value for the year to end-March.
Rhodes Food gained 4.29% to R17, after reporting a 2.1% increase in headline earnings to R84.1m for the six months to end-March, compared to the prior matching period.
Shortly after the close of the JSE, the rand was flat at R14.3841/$, 0.15% weaker at R16.083/€ and down 0.55% to R18.3968/£. The euro was up 0.11% to $1.1179.
Gold fell 0.26% to $1,274.34/oz and platinum 0.28% to $812.01.
Brent Crude was 0.33% lower at $71.82 a barrel. It had been higher earlier in the day as oil cartel Opec continues to keep a lid on supply for 2019, together with the escalating trade tension between China and the US, Reuters reported.
Locally, the market is anticipating the announcement of President Cyril Ramaphosa’s Cabinet this weekend. Appointees will be closely scrutinised amid scepticism that internal ANC battles could delay or halt Ramaphosa’s promised economic-reform agenda.
On Wednesday, Statistics SA is expected to release consumer inflation (CPI) figures for April. The CPI is expected to print at 4.5% year on year in April, unchanged from March, according to a Bloomberg consensus.