JSE retreats on rand rout with banks down 4%

The JSE recorded broad-based losses on Tuesday, amid a spate of bad news, including that SA had entered into a technical recession.

Interest-rate sensitive shares, including banks and retailers, were most affected by the rand rout, as the local currency fell as much as 3% at one stage. Losses were offset somewhat, however, as rand hedges gained.

The all share fell 1.4% to 57,891.8 points and the top 40 1.42%. Banks slumped 4.17% and general retailers 4.27%.

SA’s economy contracted 0.7% in the second quarter, tipping it into a technical recession, which is defined as two consecutive quarters of contraction. The consensus forecast had been for 0.6% growth in the second quarter. An even bleaker picture was painted with SA’s first-quarter contraction of 2.2% revised up to 2.6%.

SA’s economic performance raised the risk of the country suffering yet another credit downgrade in the second half of the year, Citadel chief economist Maarten Ackerman said.

Corporate news was negative, with MTN again posting sharp losses on news it had received a $2bn tax bill from Nigeria. Its shares plummeted another 17.05% to R72.

Mediclinic gained 2.45% to R97.99, after saying it would pay just more than R1bn for a controlling stake in a Swiss merger, in which it will combine its Geneva-based Clinique La Colline with the privately held Clinique des Grangettes.

Discovery fell 4.12% to R170.95, despite saying earlier that annual revenue to end-June grew 16.8% to R52.8bn and its net profit 27.6% to R5.7bn.

Wilson Bayly Holmes-Ovcon lost 4.67% to R142, after reporting that headline earnings per share rose 8% to R14.15 in the year to end-June.

Shortly after the JSE closed the Dow was down 0.2%, while in Europe, the FTSE 100 had lost 0.57%, the CAC 40 1.19% and the DAX 30 1.01%.

At the same time, platinum was down 1.85% to $774.20 an ounce, and gold 0.72% to $1,192.37. Brent crude was up 0.15% to $78.09 a barrel.

Source: businesslive.co.za