MARKET WRAP: JSE weakens, with gold shares faring worst

The JSE edged lower on Thursday, with gains by banks offset by losses in gold miners and Naspers.

A number of corporate earnings reports gave the market direction, but banks gained as the rand pushed to R13.80/$, boosted by Wednesday’s budget policy statement. Shortly after the JSE closed, however, it was flat at R14.01/$.

Analysts have welcomed the government’s plans to not fully bail out embattled state utility Eskom, whose debt mountain poses a risk to SA’s financial health and threatens the country’s sovereign credit rating.

South African government bonds and the rand may continue to see relief  in the near term, given that the market had priced in a more negative budget than was delivered, said Bank of America Merrill Lynch analysts. Eskom’s restructuring plan was credible, but ratings agency Moody’s Investors Service could still downgrade SA’s outlook to negative from stable.

Gold was also under some pressure after the release of surprisingly hawkish minutes from the US Federal Reserve’s most recent policy meeting. 

The all share fell 0.37% to 55,483.8 points and the top 40 lost 0.4%. Gold miners lost 3.58% and the resources index 0.98%. Banks added 1.8% and financials 1.11%.

Diversified miner Glencore fell 2.03% to R55.06 and Sibanye-Stillwater 3.96% to R15.05. The latter reported earlier that it swung into a headline loss of R117.6m in the six months to end-December.

Lonmin slumped 6.22% to R12.67, after saying that the Association of Mineworkers and Construction Union (Amcu), which is on strike at Sibanye, had been given permission for a secondary strike at its operations.

Woolworths lost 2.91% to R43.05, after saying headline earnings per share (HEPS) for the six months ended December 23 had dropped 2.9% to 200.4c. The retailer declared a 92c dividend for the first half of its 2019 financial year, down 15% from the 108.5c paid in the previous matching period.

Discovery added 0.55% to R145.95, despite reporting a 14% decline in net profit to R2.3bn for the six months to end-December.

AngloGold Ashanti gave up 3.39% to R213.51 and Harmony Gold 3.34% to R29.80.

African Rainbow Minerals leapt 6.87% to R167.82.

Global market focus was on ongoing US-China trade talks, which continue in Washington on Friday. Analysts said global equities were struggling for direction as the market awaited the outcome of the talks.

There is some optimism that a deal can be struck ahead of a March 1 deadline, although US President Donald Trump has indicated he may hold off on imposing further import tariffs on Chinese goods if the deadline is missed.

Gold was down 0.55% to $1,331.03/oz, while platinum was flat at $827.22. Brent crude had lost 0.24% to $6.96 a barrel.

The Dow was down 0.27% to 25,882.79 points, while in Europe, the FTSE 100 had fallen 0.96%. The DAX 30 and the CAC 40 were little changed.

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