JSE closes flat in cautious trade as market mulls ANC land announcement

The JSE closed flat on Wednesday in cautious trade, with a comeback in the rand failing to lift banks and financials.

Market sentiment improved after the Absa purchasing managers index (PMI) breached the 50-point neutral level in July, after two months of contraction. The index jumped to 51.5 in July after falling to 47.9 in June.

Platinum and gold stocks were among the top performers despite weaker metal prices. A sharp fall in Brent crude to below $73 a barrel kept resources on the back foot amid a stronger dollar.

The platinum price shed 2.3% to $817.5 an ounce, and is now down 12% in 2018. The gold price was 0.5% lower at $1,217.31.

Market focus was on President Cyril Ramaphosa’s overnight announcement that the ANC would seek to amend the Constitution to expropriate land without compensation.

The rand retreated to R13.39 to the dollar on the news, before recovering to R13.1883 by the JSE’s close. Local bond yields rose with the R186 bid at 8.61% from 8.575%.

Capital Economics analyst John Ashbourne said the initial market reaction was overdone. But a poorly managed process would boost market volatility. “Heated political rhetoric will probably shock the rand and gradually undermine investor confidence, even if the eventual amendment is relatively modest.” The dollar was firmer in anticipation of the US Federal Reserve’s interest-rate decision in the evening. No change is expected, but Fed officials might provide further clues on the rates trajectory for the remainder of 2018. A more hawkish stance will support the greenback.

The Dow was 0.26% higher at the JSE’s close, while European stocks followed Asian indices lower, driven down by concerns of further US tariffs on Chinese goods, Dow Jones Newswires reported.

The all share closed 0.06% lower at 57,399.50 points and the top 40 lost 0.07%. Resources shed 0.75%, banks 0.6% and financials 0.52%. Platinums gained 1.48%, the gold index 0.81% and industrials 0.45%.

BHP shed 2.19% to R295.53.

Sibanye-Stillwater rose 2.13% to R8.17 and Gold Fields 1.48% to R48.75.

Anglo American Platinum added 1.34% to R409.91.

FirstRand lost 0.72% to R68.77 and Sanlam 0.68% to R75.82.

Among property stocks, Redefine gained 0.66% to R10.70 but Intu dropped 3.53% to R29.

Naspers was up 0.84% to R3,269.14.

Mondi plc added 1.63% R366.78.