MARKET WRAP: Retailers lead losses as load-shedding weighs on sentiment

Retailers took a knock on Tuesday as load-shedding and unfavourable weather conditions took a toll on the sector, which suffered its biggest one-day drop in more than a week.

The JSE’s general retailer index dropped 2.24% as SA entered its sixth consecutive day of power failures, disrupting economic activity. The latest round of load-shedding fuelled concern about the prospects for SA’s economy, which is expected to grow by 0.6% in 2019, according to Reserve Bank forecasts.

Miners rallied on the day on a weaker rand, with resources gaining 2.08%, gold miners 3.64% and the platinum index 3.39%.

The rand weakened after manufacturing production contracted for a fifth consecutive month, by 0.8% year on year in October, data from Statistics SA showed earlier, while uncertainty in the US-China trade war heaped further pressure on the local currency and its emerging-market peers.

At 6pm, the rand had weakened 1.27% to R14.8568/$, after reaching its worst level since November 20 during intraday trade. It had fallen 1.52% to R16.4766/€ and 1.49% to R19.5666/£. The euro was up 0.23% to $1.109. 

The R2030 government bond also suffered, with the yield rising 7.5 basis points to 9.235%. Bond yields move inversely to their prices.

Investors are counting the days before the US is scheduled to impose a tariff hike on $156bn worth of Chinese goods, a move that markets fear may prolong the signing of the first phase of a trade deal.

Wall Street Journal reported on Tuesday that negotiators from the US and China are preparing to delay the tariff hike which is scheduled for December 15.  

“There are four trading days left … it looks like if the US president had to make the decision on new tariffs right now, he would implement them,” London Capital Group head of research Jasper Lawler said.

Among other risk events on the global calendar, the US Federal Reserve began its final meeting for 2019 on Tuesday while the European Central Bank is set to meet on Thursday. Both are expected to keep interest rates unchanged amid concerns of a global economic slowdown.

Shortly after the JSE closed, the Dow was flat at 27,935.82 points. In Europe, the FTSE 100 was down 0.2% and Germany’s DAX 30 0.3%, while France’s CAC 40 had gained 0.14%.

Gold was up 0.19% to $1,464.305/oz and platinum 2.75% to $918.92. Brent crude rose 0.56% to $64.42 a barrel.

The JSE all share gained 0.27% to 55,417.9 points and the top 40 0.42%. Banks dropped 1.15% and financials 0.74%. 

African Phoenix Investments said on Tuesday that it expects its net asset value per ordinary share to have increased by between 68% and 78%, or 87.50c and 92.70c, in the year to end-September. Its share price dropped 1.32% to 75c.

Online takeaway service Just Eat said its board believed that shareholders should reject the revised £5.1bn offer from Naspers subsidiary Prosus. Naspers dropped 1.09% to R2,030 while Prosus gained 0.13% to R971.

Nampak earlier announced the appointment of Erik Smuts as the company’s new CEO from January 2020. He will replace Andre de Ruyter who is expected to take up the reins at Eskom in January. Its share price rose 0.5% to R6.05. 

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