JSE closes slightly higher as risk-off sentiment pares earlier gains

The JSE pared earlier gains on Friday to close just modestly higher as banks and financials retreated on a weaker rand.

Sentiment turned risk-off on a weaker rand after EFF leader Julius Malema introduced a bill in parliament proposing that the state become the South African Reserve Bank’s sole shareholder.

Banking, financial and property stocks were the major losers on the day. Platinums were higher, while gold stocks retreated on the stronger dollar.

Sasol ended the day 1.32% up at R528.50 on a firmer Brent crude price, which had risen 0.5% to $71.73 by the close.

Globally, Turkey’s lira resumed its weakening path after the US threatened to institute further sanctions against the country. “Emerging-market worries are not going away any time soon as they continue to struggle in bear market territory,” said Oanda analyst Dean Popplewell.

The euro received some support from upbeat inflation data out of the eurozone, confirming the outlook for a first interest-rate hike in the middle of next year. Eurozone annual inflation came in at 2.1% in July, up from 2% in June. A year earlier, the rate was 1.3%.

FxPro analysts said panic in the markets had abated, but there were still not enough reasons for long-term optimism. The US has made it clear that the sanctions imposed on Turkish steel and aluminium are a “security issue” and will not be lifted, even if the Turks release American pastor Andrew Brunson. Against this backdrop, the recovery in the Turkish lira has ended, with it trading above six to the dollar again, they said.

The local market was supported by Naspers, which closed 1.08% higher at R3,180. However, it still ended the week 5.68% lower, after slumping more than 8% on Wednesday. Hong Kong-listed Tencent, of which Naspers owns about a third, was up 3% on the day after falling sharply earlier in the week on disappointing quarterly results.

Banks and financials were initially higher, despite a weaker rand, which hit R15.02 to the dollar in intra-day trade, before retreating towards the close.

Early morning optimism that the trade spat between China and the US could be resolved through more talks dissipated later, with emerging-market equities threatening to drop into bear-market territory.

The all share closed 0.15% higher at 56,647.50 points and the top 40 gained 0.19%. Platinums rose 1.22%, resources 0.79%, and industrials 0.28%. The gold index shed 1.59%, banks 1.41%, financials 0.68%, property 0.67%, and food and drug retailers 0.51%. The all share ended the week 1.83% lower.

Gold Fields lost 4.91% to R35.66.

Standard Bank dropped 1.82% to R183.77 after reporting on Thursday that interim headline earnings to end-June rose 5% to R12.6bn.

Steinhoff International jumped 18.78% to R2.34 after the debt-laden group said it was making further progress in negotiations with creditors.

Growthpoint lost 1.33% to R25.95.

Tiger Brands dropped a further 7.82% to R275 after it released a disappointing trading update on Thursday, in which it said it expected its annual earnings to end-September to plunge between 22% and 37%.

City Lodge ended the day 1.13% higher at R136.

Famous Brands closed 0.7% higher at R101, despite it warning on Thursday that losses at its UK operations had increased.