MARKET WRAP: JSE reverses course to end lower, rand weakens after US Fed chair stirs volatility

The JSE finished lower on Friday after a wild session during which the all share index rose as much as 1% before pulling back in line with other world markets.

The gyrations came after US Federal Reserve chair Jerome Powell said the US economy will need tight monetary policy “for some time” before inflation is under control, Reuters reported. Powell made the remarks in a speech kicking off the Jackson Hole central banking conference in Wyoming. 

“After waiting the whole week for Powell’s speech at Jackson Hole, the market got a whole 7-minute speech which only reiterated the Fed’s mantra that its monetary policy will be data-driven going forward,” Wichard Cilliers, head of market risk at TreasuryONE.

“We have seen markets struggling to digest the short speech by Powell,” with the rand trading quite wildly in a 10-cent range after he spoke.

The JSE all share index reversed course to finish 0.24% lower at 70,173 points, dragged down primarily by big-cap industrial stocks, most notably Naspers and Richemont, that lost 2.33% and 2.53% respectively. The top 40 was off 0.28%.

The rest of the market held up reasonably well on the day, with Nedbank gaining 4% to R224.27 to outperform its peers.  Insurance stocks staged a comeback after a wobble on Thursday in the wake of the news that they were being investigated by the Competition Commission for allegedly fixing prices of insurance products.

However, the listed property sector fared poorly, dragged by news that Rebosis Property Fund has filed for business rescue after failing to implement its turnaround plan. Rebosis voluntarily applied for, and succeeded, in having the trading of its shares on the JSE suspended with immediate effect, until it is able to get cash flow into a reasonable position.

Emira Property Fund was off 5.64% at R10.20 and Vukile Property slipped 2.43% to R13.66.

Capital & Counties fell 2.25% to R24.32, taking its losses to about 19% since August 3, indicating market concern about the fallout of the technical recession on property values in the UK where it has operations.

Commodity prices were under pressure because of a stronger dollar after Powell’s speech, which some viewed as hawkish. The gold price was off 1.29% to $1,735.64/oz, platinum slid 1.44% to 869.30/oz and palladium 1.63% to $2,114/$.

In the currency market, the rand gave up 0.5% to trade at 16.82/$ as of 6.30pm.

The Dow Jones Industrial Average was down 1.9% at 7pm, and the tech-heavy Nasdaq was 2.7% in the red. In Europe the FTSE 100 was 0.7% lower, the Dax gave up 2.26% and the CAC 40 shed 1.68%.

[email protected]