JSE closes weaker as market braces for Fed hike

The JSE closed lower on Friday as the weaker rand failed to lift the overall market amid cautious global trade ahead of an expected interest-rate hike next week in the US.

Naspers led the losers, by volume, with the market heavyweight closing lower for the first time in seven sessions. Banks and retailers lost ground after the rand reached a six-month low to the dollar.

Platinum stocks fell despite a higher metal price, amid warnings that local operations could shed up to 600,000oz of production in 2018. The platinum price had climbed 0.7% to $904.25 an ounce by the JSE’s close.

The market has priced in a 25 basis-point increase in the US, but a more hawkish stance from the US Federal Reserve amid heightened tension between President Donald Trump and European leaders at the Group of Seven summit could trigger risk-off sentiment.

Trade tension, brought about by Trump’s tariff increases, have placed a further damper on market sentiment, with the Fed set to make its announcement on Wednesday.

The Fed might signal an increase in the number of rate hikes from three to four in 2018.

Concern about tighter liquidity brought about by reduced easing policies from the Fed, caused the rand to weaken to R13.2871 to the dollar, before recovering to R13.11, from Thursday’s R13.0246, soon after the JSE’s close.

The European Central Bank (ECB) is also expected to announce an end to its asset-purchase programme by the end of 2018.

“Faster policy normalisation in advanced economies will add to emerging-market woes,” said Rand Merchant Bank trader Mpho Tsebe.

Investors will also be awaiting the outcome of Trump and North Korean President Kim Jong-un’s June 12 meeting.

The all share closed 0.29% lower at 58,223.70 points and the top 40 was down 0.3%. The platinum index dropped 1.62%, general retailers 0.72%, banks 0.59%, industrials 0.55% and financials 0.41%. The gold index climbed 1.36% and resources 0.51%.

The all share ended the week 1.64% higher, its best weekly performance in almost four months, but it remains 2.15% down in the year to date.

British American Tobacco rose 1.66% to R643.70.

Bidvest was flat, at R202.75, after the group said “its trading profit continued to grow for the 10 months to end-April, albeit at a slower pace than that reported to December 2017”.

Impala Platinum shed 3.33% to R22.05.

Standard Bank lost 0.86% to R204.62.

Sanlam rose 0.94% to R73.38.

Steinhoff International dropped 2.36% to R1.24, Redefine Properties 1.47% to R10.69 and Naspers 2.4% to R3,339.99.

The top 40 Alsi futures index lost 0.44% to 51,974 points. It ended the week up 1.6%. The number of contracts traded on Friday was 25,464 from Thursday’s 22,222.