MARKET WRAP: JSE closes lower as markets digest US employment data
The chances of an interest-rate cut in the world’s largest economy have fallen, putting pressure on the rand and local shares
The JSE closed lower on Friday as US employment data exceeded market expectations.
Non-farm payrolls — which measure changes in the US labour market over each month — saw job numbers increase by 224,000 in June, from a gain of 75,000 in May, exceeding the Bloomberg consensus of 160,000. The data is considered an important indication of the state of the US economy, and especially so now amid expectations that the US Federal Reserve may need to cut interest rates to boost economic activity.
“Its a huge number, it just shows that the US economy is alright. The US Fed is still factoring in a rate cut in July but the possibility has dropped significantly. There are still three weeks to go and more data is yet to come. I would not be surprised to see a couple more decent numbers come in before the meeting,” said portfolio manager at Sanlam Private Wealth, Nick Kunze.
The unemployment rate rose to 3.7% in June from 3.6% in the previous month, while average wages grew 0.2%, unchanged from May.
After the JSE closed, the rand had weakened 0.96% to R14.1845/$, 0.32% to R15.9079/€, and 0.39% to R17.7389/£. The euro had fallen 0.61% to $1,1215.
Gold was 1.38% lower at $1,395.49/oz, while platinum slumped 3.36% to $807.69. Brent crude gained 1.19% to $63.91 a barrel.
The benchmark R186 government bond was weaker, with its yield rising 9.5 basis points to 8.16%. Bond prices move inversely to bond yields.
Shortly after the JSE closed, the Dow was 0.44% weaker at 26,846 points, after having been closed for US Independence Day on Thursday. In Europe, the FTSE had fallen 0.66%, France’s CAC 40 0.48%, and Germany’s DAX 30 0.49%. In Asia, the Shanghai Composite gained 0.19% and Japan's Nikkei 225 0.2%, while Hong Kong’s Hang Seng was flat.
The JSE all share fell 0.41% to 57,589.80 points and the top 40 0.4%. Gold miners lost 1.72% and resources 1.91%.
Kumba Iron Ore slumped 7.34% to R471.68 and African Rainbow Minerals 4.36% to R175.01.
Large diversified miner BHP relinquished 2.68 to R345.92, Anglo American 2.08 to R378.80, and Glencore 0.77% to R47.77.
Among gold miners, Gold Fields fell 2.27% to R71.93, Sibanye-Stillwater 2.19% to R15.60, AngloGold Ashanti 1.46% to R247.43, and Harmony 0.64% to R30.86.
Old mutual gained 0.43% to R21.23. The insurer said on Friday that it will file court papers to block former CEO Peter Moyo’s bid to be reinstated.
Naspers gained 0.97% to R3,481.86. On Friday, the internet and media group’s fintech subsidiary PayU said it had acquired a majority stake in Red Dot Payment, a Southeast Asia-focused online payments business.
EOH jumped 7.38% to R24 despite uncertainty about the outcome of a forensic investigation into its dealings with the government.
Aspen Pharmacare dropped 4.89% to R99.64 after after the company said on Friday that it had terminated its discussions with a potential partner in Europe.
In the coming week, Statistics SA is scheduled to release mining and manufacturing production figures for May.