JSE opens flat as market braces for possible recession

The JSE opened flat on Tuesday on a recovery in Naspers and amid cautious trade ahead of the release of local GDP numbers later in the morning.

The consensus view is for growth of 0.5% in the second quarter. The economy would then escape an official recession following the first quarter’s retraction of 2.2%. However, much depends on the volatile agricultural sector, with disappointing numbers from the sector increasing the likelihood of disappointing data.

“The agricultural sector is expected to have contracted substantially compared to the first quarter, while published trade data for the second quarter also point to another quarterly decline,” said Investec chief economist Annabel Bishop.

However, she said the country may avoid a technical recession by a fine margin.

The rand was weaker in anticipation, falling to within a whisker of R15 to the dollar, before marginally recovering to R14.9874 from R14.9969.

Naspers rebounded from a recent negative patch, gaining 1.45% to R3,251.59. Chinese internet company Tencent, of which Naspers owns about a third, was up nearly 2% in Hong Kong trade.

Asian markets picked up the pace, with the Dow closed on Monday for Labor Day. The Hang Seng added 0.76% and the Shanghai Composite 1.1%.

At 9.25am the all share was 0.08% up at 58,757.30 points and the top 40 added 0.11%. Industrials rose 0.31% and the gold index 0.12%. Banks lost 0.96%, general retailers 0.93%, and food and drug retailers 0.88%.

British American Tobacco rose 1.29% to R724.73.

Discovery was 1.96% lower at R174.80. The group’s overall income to end-June grew by 16.8% to R52.8bn and its net profit by 27.6% to R5.7bn.

TFG lost 1.56% to R176.24 after earlier reporting a solid 32% growth in turnover for the first 20 weeks of its financial year to end-March.

Resilient dropped 1.85% to R56.25 and Fortress B 0.38% to R15.87.

Famous Brands lifted 0.62% to R102.38.

Source: businesslive.co.za