MARKET WRAP: JSE drops for a second day on Brexit concerns
Consumer inflation moderated to an annualised 4.1% in September from 4.3% in August, according to data from Statistics SA
The JSE closed lower for a second consecutive day, while global markets were mixed as investors await the EU’s verdict on the Brexit extension.
Bloomberg reported earlier that European Council president Donald Tusk said he will recommend that the EU approve a Brexit delay. UK MPs voted for the Withdrawal Agreement Bill on Tuesday but rejected Prime Minister Boris Johnson’s timetable to the leave the EU.
“The only question is how Boris Johnson will spend the next three months. There are rising talks of an early general election in the UK,” London Capital Group senior market analyst Ipek Ozkardeskaya said.
The rand lost ground on Wednesday after strengthening more than 1% on Tuesday. At 5.45pm it had weakened 0.31% to R14.6331/$, 0.27% to R16.2743/€ and 0.41% to R18.8556/£. The euro was flat at $1.1122.
Gold added 0.44% to $1,494.18/oz and platinum 2.71% to $915.47. Brent crude was up 1.01% to $60.2 a barrel.
The Dow was up 0.26% to 26,856.52 points, while, in Europe, the FTSE 100 had gained 0.65% and Germany’s DAX 0.23%, while France’s CAC 40 was down 0.13%.
Earlier, the Shanghai Composite fell 0.43% and Hong Kong’s Hang Seng 0.82%, while Japan’s Nikkie 225 rose 0.34%.
Locally, consumer inflation moderated to an annualised 4.1% in September from 4.3% in August, data from Statistics SA showed earlier. The median forecast was for the consumer price index (CPI) to remain at 4.3% according to Bloomberg.
“The effects of a generally weak demand environment are evident in the broader [consumer inflation] dynamics, particularly for discretionary goods and services. This coupled with the relatively low pass-through from currency weakness should offset the effects of robust administered price inflation,” Investec economist Kamilla Kaplan said.
The JSE all share fell 0.65% to 55,571.5 points and the top 40 0.74%. Banks and industrials gave up 1.52% and 1.84%, respectively.
Standard Bank dropped 3.5% to R175, Nedbank 1.46% to R240.55, FirstRand 0.82% to R67.74, and Absa 0.71% to R162.94.
Quilter relinquished 2.83% to R26.44. The financial services company said on Wednesday that assets under management increased 9% to £118.7bn (R2.2-trillion) in the nine months to end-September.
Cartrack jumped 5.06% to R24.48. The company said earlier that its headline earnings per share increased 28% to 72.2c in the six months to end-August.
Distell gained 1.97% to R140.72, despite the spirit maker saying earlier that it recorded low single-digit volume declines and single-digit revenue growth in the first quarter to end-September.
No major domestic economic data is expected on Thursday, while European Central Bank (ECB) president Mario Draghi is set to give his final monetary policy announcement. The consensus according to Trading Economics is for the deposit facility rate to remain unchanged at -0.5% amid mounting expectations that other major central banks will move to ease monetary policy.