MARKET WRAP: JSE drops for third day despite China allaying virus fears
Consumer inflation, as measured by the consumer price index, increased to 4% in December, in line with market expectations
The JSE erased earlier gains to record its third consecutive day of losses on Wednesday, while the rand had its best day in three weeks as investors took some comfort from China’s easing of fears over the coronavirus epidemic.
The rand, which is on track for its first weekly gain in three, was on the front foot for most of Wednesday. At 5.41pm, it had firmed 1.13% to R14.3333/$, 1.21% to R15.8743/€ and 0.42% to R18.8379/£. The euro was flat at $1.1075.
“The rand has stabilised following the knee-jerk reaction to the coronavirus outbreak in Asia, stepping back below R14.50/$. All eyes will be on developments at Eskom in the run-up to the February budget, while the new CEO enacting some changes could also be supporting sentiment,” Mercato Financial Services analyst Nico du Plessis said.
China’s National Health Commission said on Wednesday that it had put measures in place to limit public gatherings after 440 cases of the coronavirus were reported, Reuters said.
The R2030 government bond was a little weaker with the yield rising 1.5 basis points to 8.995%. Bond yields move inversely to their prices.
Gold was down 0.18% $1,555.27/oz while platinum added 1.68% to $1,015.62. Brent crude lost 2.11% to $63.14 a barrel.
Locally, consumer inflation, as measured by the consumer price index (CPI), increased to 4% in December, in line with market expectations, up from 3.6% in November, data from Statistics SA showed on Wednesday. This is below the mid-point of the Reserve Bank’s 3% to 6% target band. Higher inflation generally weakens the purchasing power of the rand.
Earlier, the Shanghai Composite gained 0.28%, Hong Kong’s Hang Seng 1.27% and Japan’s Nikkei 225 0.7%.
Shortly after the JSE closed, the Dow had added 0.38% to 29,307.76 points. In Europe, the FTSE 100 was down 0.36% and France’s CAC 40 0.23%, while Germany’s DAX 30 was flat.
The JSE all share fell 0.1% to 57,918.9 points and the top 40 was flat. Gold miners lost 0.21% and banks gained 0.13%.
Shoprite said on Wednesday that sales from its SA supermarkets grew by 9.8% in the six months to end-December. The retailer said its liquor store sales jumped by 20% during the period. Its share price gained 2.77% to R118.08, the most in just more than a month.
Naspers has sold €1.5bn (R24bn) worth of new shares in its international internet assets subsidiary Prosus, the company said on Wednesday. Naspers rose 0.64% to R2,486.35 while Prosus dropped 3.36% to R1,099.91, its biggest fall in nearly three months.
TFG announced the appointment of former Goldman Sachs Sub-Saharan Africa CEO Colin Coleman as an independent non-executive director on the retailer’s board. Its share price fell 0.81% to R150.18.
Billionaire Johan Rupert’s investment company Reinet said on Wednesday that the net asset value of its main fund rose by 14% to €5.5bn in the three months to end-December. Reinet’s share price rose 1.29% to R293.34.