The JSE was flat on Thursday morning, with gains by most indices offset by a weaker Naspers, as SA waited for an update on its monetary policy outlook.
The consensus among 22 analysts polled by Bloomberg is for a 25-basis-point cut to the repo rate on Thursday afternoon, while the market is also partially pricing in a second cut for 2019, possibly in September.
The cut will be welcomed amid tepid local economic growth, and the prospect of lower interest rates globally is offering room for looser monetary policy domestically.
Analysts have warned, however, that risks to SA persist, and a 25-basis-point rate cut will do little to improve long-term sentiment, as SA continues to grapple with structural economic problems such as a widening fiscal deficit.
Historical easing rate cycles have been positive for the SA retail sector, said IG senior market analyst Shaun Murison in a note, adding that lower rates assume less pressure on the consumer and an improved debt appetite.
“Recent results from major retailers highlight a weak economy and pressured consumer, with little suggestion of a turnaround in the near term for these counters,” Mursion said. A rate cut should provide a short-term boost for local retailers, he said.
At 9.32am the all share was flat at 57,613.6 points, while the top 40 had fallen 0.11%. Industrials were down 0.33%. Gold miners had added 2.72% and platinums 1.87%.
Gold was down 0.43% to $1,420.10/oz while platinum had risen 0.56% to $848.62. Brent crude was 0.16% higher at $63.58 a barrel.
Global sentiment was risk-off on Thursday amid further signs overnight that a US-China trade war resolution is not yet in reach. Uncertainty persists regarding US restrictions on Chinese tech giant Huawei, while the US has complained that China has not lived up to a pledge to increase imports of US agricultural products.
Asian markets were sharply down, with the Shanghai Composite leading the losses.
Naspers fell 0.64%, tracking a fall in Hong Kong-listed Tencent, of which it holds a sizable stake.
Anglo American Platinum was up 3.02% to R806.81, having earlier reported that total platinum group metals production rose 1% in its second quarter to end-June, though the quarter was marked by unprotected strikes at some of its operations.
Rand hedge British American Tobacco was up 1.23%, while Richemont had fallen 1.74% to R118.36.
Richemont earlier reported that sales for its first quarter to end-June rose 9% at constant exchange rates year on year.
Shoprite was up 1.18% to R159.42.