JSE opens weaker as gold price falls to lowest level in 2018

The JSE opened weaker on Thursday morning as the gold price fell to its lowest level so far in 2018, pulling vulnerable gold stocks down.

Data from the Minerals Council SA (the former Chamber of Mines) showed that 80% of SA’s gold mines were unprofitable at prevailing gold prices of about R520,000/kg.

Gold has been pummelled by the stronger dollar as well as US Federal Reserve chair Jerome Powell’s recent comments on US employment and inflation.

“This helped to sustain expectations for another interest rate increase in September,” analysts at Nedbank Corporate and Investment Banking said.

The gold price has lost 6.2% in rand so far in 2018. The gold index has shed 23% in 2018.

Asian markets turned negative following an upbeat opening on a higher Dow closing on Wednesday. The Dow was buoyed by financials with Morgan Stanley reporting second quarter results that beat forecasts.

The Dow firmed 0.32%. The Nikkei 225 lost 0.13%, the Shanghai Composite 0.53% and the Hang Seng 0.27%.

The market was eyeing the Reserve Bank’s interest-rate decision later in the day, with no change expected.

Commodity prices were lower at the opening, with platinum shedding 1.71% to $803.93 an ounce. Gold fell 0.73% to $1,218.48, while Brent crude shed 1.12% to $72.16 a barrel.

Woolworths was slightly down on a negative trading update, indicating a loss due to the impairment of its Australian department store chain, David Jones. But updates from Massmart and Dis-Chem pleased the market.

Banks and financials found some support from buyers despite the weaker rand. Naspers slipped on a weaker Tencent in Hong Kong trade.

At 10am the all share was 0.41% lower at 56,004 points and the top 40 lost 0.55%. Resources were down 0.67%, the gold index 0.64%, industrials 0.56% and food and drug retailers 0.48%. Financials edged 0.09% higher and banks 0.02%.

Anglo American was 1.14% lower at R287.29.

Kumba Iron dropped 0.27% to R308.82. Total production rose 2% in the second quarter.

Sibanye-Stillwater was 1.78% lower at R7.18 and AngloGold Ashanti 0.41% to R108.05.

Nedbank lifted 0.29% to R261.91.

Transaction Capital rose 2.76% to R17.50.

Woolworths was 0.32% lower at R52.73.

Massmart rose 3.04% to R109.74 after reporting interim sales to end-June rose 1.9%.

Dis-Chem firmed 2.32% to R26.50. Releasing its trading update for the four months to end-June, the company said total sales rose 11% to R7bn, compared with a matching period a year ago.

Nepi Rockcastle lost 0.87% to R117.47.

Naspers was down 1.49% to R3,315.