MARKET WRAP: JSE drops for a third week on continued global growth concerns

The JSE suffered its third consecutive weekly drop on Friday, as fears about the state of the global economy weighed on investor sentiment following the release of more poor economic data.

US non-farm payrolls for September came in lower than expected on Friday. The data is considered an important indicator of the health of the world’s largest economy. Non-farm payrolls increased by 136,000 from 165,000 in the previous month but below expectations of 145,000 according to Trading Economics.

The latest figure and poor manufacturing data released this week have further supported expectations that the US Federal Reserve may cut interest rates at their last two meetings for 2019.  

“[US Federal Reserve chair Jerome] Powell may choose to wait to see what happens with next week’s high-level trade talks before committing to more easing. The narrative is not as clear as he may have preferred: the trend in job growth is clearly in deceleration mode and wage growth is at its lowest level in a year, but the unemployment rate just hit a fresh 50-year low,” said Oanda senior market analyst Edward Moya.

“The data-dependent Fed has enough ammunition to commit to another rate cut, but they could still hold off on committing to an easing cycle,” Moya said.

A cut from the Fed may allow room for the SA Reserve Bank to cut the repo rate as the local economy is forecast to grow by just 0.6% in 2019, according to the Bank.

The rand gained this week after two consecutive weeks of losses, testing the R15/$ mark. At 5.21pm, it had firmed 0.79% to R15.037/$, 0.65% to R16.5114/€ and 0.97% to R18.5121/£. The euro was 0.15% firmer at $1.098.

Gold was up 0.13% to $1,506.81/oz while platinum lost 0.96% to $879.44. Brent crude added 1.25% to $58.33 a barrel. 

Shortly after the JSE closed, the Dow was 0.73% higher at 26,392.23 points. In Europe, the FTSE 100 had added 0.83%, France’s CAC 40 0.64% and Germany’s DAX 0.47%. 

The JSE all share gained 0.5% to 53,993.9 points and the top 40 0.48%. Banks rose 1.61% and financials 1.19%. The all share lost 2.2% in the week, cutting its 2019 gains to just 2.38%.

Famous Brands added 0.31% to R78.54 after saying earlier that it expected its basic earnings per share to be in a range of 143c and 175c, an improvement of between 125% and 131%, in the six months to end-August.

Pembury jumped 16.67% to 7c. On Friday, it reported a basic loss per share of 2.14c in the six months to end-June, which was a 46.7% improvement from the previous comparable period.

Adcorp plummeted 22.5% to R15.50 after the labour broker said on Friday that it expected headline earnings per share to decrease by between 93.3% and 94.5% in the six months to end-August. 

Statistics SA is expected to release mining and manufacturing production figures for August on Thursday, while the SA Chamber of Commerce and Industry (Sacci) is set to release the business confidence index for September. The Bloomberg median forecast is for the index to have fallen to 89 points, from 89.1 in August.

mjoo@businesslive.co.za