MARKET WRAP: JSE ends week as it started — in the red

The JSE all share closed weaker on Friday as risk-off sentiment hit banks and financials hard with gold shares the only positive performers in what was a dismal week for the market.

The all share ended the shortened week 2.55% lower, closing in the red every day of the week as the US Federal Reserve’s hawkish tone set the scene for more rate hikes there.

This is likely to support the dollar further, as emerging-market currencies remain under pressure amid strong US GDP growth, which remained unchanged in the third estimate at a quarterly 4.2%.

The American economy is in great shape, FxPro analysts said. “One can tell it by the labour market, the level of consumer confidence, and indicators of business activity.”

The Dow was marginally higher at the JSE’s close, with European markets struggling to make headway despite strong data from the German labour market, and as Italy revised its fiscal deficit targets for the next three years markedly up. 

The JSE all share closed 0.5% lower at 55,708.50 points on Friday, its lowest level in more than two months. General retailers lost 1.76%, food and drug retailers 1.36%, financials 1.27%, banks 1.19% and property 0.84%. The gold index gained 1.23%, platinums 0.65% and and resources 0.17%.

Naspers ended Friday 0.89% lower at R3,051.64, having lost 6.05% in the week.

Absa relinquished 1.57% to R151.88 on Friday, FirstRand 1.42% to R67.87, and Standard Bank 1.24% to R175.

Steinhoff International lost 4.17% to R2.30 and Netcare 3.16% to R24.21.

Next week is expected to be light on both economic data and company results. 

The Bureau for Economic Research will release the September Absa manufacturing purchasing managers index (PMI) on Monday. After the shock plunge in August to 43.4 points, a modest rebound is likely, but the indicator is expected to remain well below the 50 neutral mark.

September vehicle sales will also be out on Monday.

IT company and former market darling EOH will report annual results to end-July on Wednesday. Normalised headline earnings are expected to decrease by between 30% and 45%. It lost 2.81% to R37.71 on Friday and is now down 44% this year.

Despite coming close, the rand failed to break through R14 to the dollar this week, and was trading at R14.1513 from R14.1733 after the JSE’s close on Friday. The euro was at $1.1581 from $1.1641.

The rand showed little reaction to positive trade numbers with the country recording an R8.79bn surplus in August from a revised R5.29bn deficit in July. The cumulative surplus for the first eight months of 2018 was R2.66bn compared to R39.9bn by the same time in 2017.

The benchmark R186 bond was last bid at 8.99% from 8.98%. The US 10-year treasury was last seen at 3.0467% from 3.053%.

The US Fed hiked rates by 25 basis points to 2.25% in the week, while also signaling a further rise in December. Fed chair Jerome Powell played down concerns that bond markets were signaling rising odds of a recession and reiterated his positive assessment of the US economy, Dow Jones Newswires reported.

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Source: businesslive.co.za