MARKET WRAP: JSE slips a little in cautious trade

The JSE closed slightly weaker on Wednesday, with banks and financial stocks faring best, offsetting losses by Naspers and most miners.

Global equity markets were mixed on the day, as investors waited for the major scheduled event this week, the US Federal Reserve monetary policy announcement on Wednesday evening.

Expectations of dovish signals from the Fed as well as dovish commentary by European Central Bank (ECB) president Mario Draghi has lifted sentiment this week, offering the prospect of loose monetary policy in coming months.

US President Donald Trump also announced on Tuesday that he will be meeting with Chinese President Xi Jinping next week, ending market speculation that the meeting wouldn’t take place, and that the US-China trade war would escalate.

A firmer rand continues to benefit local interest rate-sensitive shares a little, with the rand 0.14% weaker at R14.5266/$ as the JSE closed. The local currency, however, jumped 2% against the dollar on Tuesday.

The all share fell 0.11% to 58,564.7 points and the top 40 0.11%. Banks rose 1.7% and financials 1%. Platinums lost 2.16%.

Shortly after the JSE closed, gold was down 0.21% to $1,343.90/oz, while platinum had lost 0.12% to $801.11. Brent crude was flat at $62.26 a barrel.

The Dow was up 0.14% to 26,501.66 points while the tech-heavy Nasdaq had lost 0.11%. In Europe, the FTSE 100 had lost 0.44% and the DAX 30 0.26%; France’s CAC 40 was flat.

Earlier local data was a little disappointing, with inflation, as measured by the annual change in the consumer price index (CPI), accelerating to 4.5% in May, with market expectations being for no change from April’s 4.4%.

Weak domestic demand is likely to keep inflation at the Reserve Bank’s mid-point target of 4.5% for the rest of the year, said FNB economist Matlhodi Matsei in a note. Dovish signals from global central banks are likely to prompt the Bank to also adopt a dovish tone during its July meeting, when SA should get a 25-basis-point cut in the repo rate, she said.

FirstRand rose 1.74% to R69.69, Standard Bank 2.08% to R204.52, Absa 2.11% to R178.21, and Nedbank 1.36% to R264.66.

Naspers lost 1.48% to R3,464.16, despite Tencent, in which it is the main shareholder, surging almost 4% earlier. The market heavyweight releases its results for the year to end-March on Friday, while there have been reports that the Public Investment Corporation (PIC) is considering cutting its R245bn stake.

Rand hedge British American Tobacco gave back 2.14% to R512.51, while AB InBev gained 0.94% to R1,271.50.

Motus Holdings added 1.33% to R85.41. It warned earlier that sales would likely remain flat in the year to end-June, citing a tough operating environment.

Old Mutual rose 0.79% to R21.79. Its former CEO Peter Moyo, who was fired on Tuesday, has indicated that he will challenge the decision in court.

Focus on Thursday is squarely on the state of the nation address (Sona). Expectations are high that President Cyril Ramaphosa will outline plans to rein in the debt at state-owned enterprises, an issue that remains a threat to SA’s last investment-grade credit rating with Moody’s Investors Service.

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