MARKET WRAP: JSE ends lower, but gold and platinum stocks hold up

The JSE ended lower on Friday as a sell-off in mega-cap industrial stocks outweighed a sharp rebound in mining stocks.

The all share index lost 0.64% to 72,919.72 points as British American Tobacco and Richemont shed 3.87% and 2.24%, respectively, while Naspers retreated 2.54%. The top 40 index gave up 0.66%, reflecting a global risk-off tone amid rising geopolitical risk in the Middle East.

Domestic industrial stocks also came under pressure, with Vodacom losing 2.58% to R102.19 — its lowest level since the early days of the Covid-pandemic, while Pick n Pay dropped 5.37% to R31.22, its lowest since 2009, ahead of the release of its financial results on Wednesday.

Remgro, chaired by Johann Rupert, slipped 2.14% to R149.59 while Motus, which owns a network of car dealerships in SA, the UK and Australia, fell 2.63% to R91.18.

However, gold and platinum group metals shares surged in line with higher metals prices. The JSE’s precious metals and mining index leapt 4.9% as the gold price rallied 3% to $1,925.12/oz in its biggest one-day jump since mid-March, on safe-haven flows.

The risk premium was also reflected in higher international oil prices, with Brent crude gaining nearly 4% to $89.44 as markets priced in a potential disruption in supplies in the Middle East where tension between Israel and Hamas continues to increase.

The latest geopolitical risk is a potential setback for global markets, which are still dealing with the fallout of the Russia-Ukraine war and global higher interest rates.

The JSE in particular has had a torrid time, with all-share in negative territory for the year, having reversed gains of up to 10% at the start of 2023.

“Generally, the fourth quarter is a good one for global markets and should be no different for the JSE. It’s likely the US Federal Reserve will hold off in raising rates in November,” said Greg Katzenellenbogen, senior portfolio manager at Sanlam Private Wealth.

“The recent fall in the oil price also means that equity markets might have some tailwinds going into Christmas, but the wild card is the Middle East. Any escalation can upset the rosy picture I painted, because if oil rises sharply then that will be a big negative for equity prices in general.”

The rand held up relatively well despite the global risk aversion and was flat at R18.98/$ in late trade on Friday.

mahlangua@businesslive.co.za