MARKET WRAP: JSE weakens as general retailer index slumps

The JSE fell on Thursday, with a hair-raising crash by general retailers the main event, although banks were also under serious strain.

Disappointing trading updates from both Woolworths and Mr Price prompted the slide, which spilled over into other sectors of the market. A weaker rand — partially due to a more dovish tone from the Reserve Bank — benefited precious metal miners but put banks under strain.

Mr Price plunged 16.69% to R215.90 after saying in a sales update for the December quarter — the third quarter of its financial year — that sales grew a pedestrian 1.9% year-on-year. Retailers had been relying on the festive season and Black Friday to bolster their bottom line.

Woolworths fell 9.98% to R49.44m after reporting 1.9% growth in group sales for the 26 weeks to December 24 2018. 

Analysts said the results were poor, reflecting the strain put on consumers amid tepid wage growth, rising fuel costs, and the increase in VAT. TFG, however, gained 3.24% to R175.49, saying earlier consolidated turnover grew 8.3% year-on-year in December 2018.

Shoprite slumped 4.82% to R186.25 and Spar 4.38% to R201.50.

The all share fell 0.65% to 53,436.2 points and the top 40 0.77%. General retailers lost 7.62%, food and drug retailers 3.06%, and banks 1.56%. Platinums gained 3.72% and the gold index 2.49%.

The rand was weaker against major global currencies, extending earlier losses after the Reserve Bank monetary policy committee announcement. It was suffering earlier from a risk-off tone in global markets amid continued fears over the pace of global growth this year. 

Bank governor Lesetja Kganyago said the Bank’s inflation outlook had moderated, but also cited ongoing geopolitical risk factors.  “The economy’s recovery from the technical recession in the first half of 2018 is welcomed, but it remains modest, with growth constrained by subdued demand as a result of weaker levels of consumer and business confidence,” he said.

Rand hedge British American Tobacco gained 1.83% to R449.45 and AB InBev 1.53% to R984.01.

Imperial Logistics gave up 4.41% to R70.30.

Sibanye-Stillwater gained 3.52% to R10. Anglo American Platinum rose 3.99% to R574.

FirstRand slipped 2.33% to R67.56.

Tiger Brands gained 3.63% to R282.69.

US markets opened weaker as investors continued to digest US corporate earnings. Strain between the US and China was a factor noted by some analysts, amid reports that the US was in the advanced stages of an inquiry into intellectual property theft by Chinese tech giant Huawei.

Shortly after the JSE closed, the Dow was off 0.12% to 24,176.12 points, while in Europe the FTSE 100 had given up 0.29%, the CAC 40 0.28% and the DAX 30 0.15%.

Gold lost 0.19% to $1,290.87/oz while platinum was flat at $807.41. Brent crude fell 1.53% to $60.38 a barrel.

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