MARKET WRAP: JSE closes lower with banks leading losses
US Fed rate-cut expectations have kept the local currency below R14 to the dollar for a third day
The JSE closed lower on Monday, tracking Asian markets, amid concern that the US Federal Reserve may only make a moderate cut to the interest rate this month.
Expectations that the Fed will cut rates by 50 basis points have started to wane after the Fed dismissed assumptions that its CEO John Williams had hinted at a meaningful rate cut late last week.
Markets have now priced in the chance of a 25 basis-point rate cut at 100% at the end of the month. The anticipation of the cut has kept the local currency below R14 to the dollar for a third trading day.
Locally, investors have been watching the unfolding battle between President Cyril Ramaphosa and public protector Busisiwe Mkhwebane, which has investors concerned about the effect it will have on the president’s economic reform agenda.
The battle comes after Mkhwebane released a damning report on a campaign deposit received by Ramaphosa from corruption-accused company Bosasa.
“The report introduces some additional uncertainty on the domestic political front and concern that this may compromise Ramaphosa’s reform agenda could keep investors at bay,” Mercato Financial Services analyst Nico du Plessis said in a note.
Shortly after the JSE closed, the rand had firmed 0.5% to R13.8582 to the dollar, 0.51% to R15.5451 to the euro and 0.63% to R17.3023 to the pound. The euro was flat at $1,1217.
Gold had gained 0.4% to $1,426.42 an ounce and platinum 0.25% to $847.13. Brent crude was up 0.91% to $63.40 a barrel, amid concern over tension between Iran and the UK after the former seized a British tanker last week.
Soon after the JSE’s close, the Dow had fallen 0.18% to 27,105.48 points as Wall Street enters an important corporate-earnings week. In Europe, the FTSE 100, France’s CAC 40 and Germany’s DAX 30 were all flat. Earlier, the Shanghai Composite fell 1.27%, Hong Kong’s Hang Seng 1.37% — as pro-democracy protests intensified over the weekend — and Japan’s Nikkei 225 0.23%.
The JSE all share lost 0.4% to 58,015.10 points and the top 40 0.42%. Banks fell 0.93% and financials 0.71%.
Absa fell 1.7% to R169, Standard Bank 1.12% to R189.78, Nedbank 0.86% to R250.56 and FirstRand 0.63% to R64.38.
Discovery was down 1.17% to R139.84, Sanlam 1.03% to R76.12, Santam 0.39% to R307.79 and Old Mutual 0.32% to R21.63.
Naspers gained 0.26% to R3,468.85, while British American Tobacco relinquished 2.34% to R528.70
Anglo American Platinum rose 0.73% to R836.80 after the miner declared an interim dividend of R11 per share for the six months ended June, on Monday.
Safari jumped 24.41% to R5.30, its best level in 10 months, after the mall owner said it said it had received a R1.8bn buyout offer from unlisted Community Property (Comprop).
Murray & Roberts dropped 5.08% to R11.20 after it said on Monday its takeover by German company Aton had been blocked by competition authorities as the parties were close competitors in the underground mining market in SA.
Clover fell 2.13% to R23. The company said on Friday that the Competition Commission had conditionally approved its takeover, by a consortium led by Tel Aviv-based Central Bottling Company, for R4.8bn.
Pioneer Foods rose 0.44% to R102.95. Financial services company Moody’s said in a report on Monday that PepsiCo’s acquisition of the food producer for $1.7bn is credit positive for the US beverage company.