JSE edges lower as market awaits interest rate announcement

Johannesburg – Major indices on the JSE have been marginally lower on Thursday, as the market waits for the South African Reserve Bank’s announcement on interest rates later in the afternoon.

It seems quite likely that the repo rate might be lowered again, after better-than-expected inflation figures on Wednesday and news that the Federal Reserve will keep US interest rates unchanged.

A rate cut should be good news for the economy and support share prices, but it seems that such a possibility has already been discounted and that confidence levels are extremely low.

Not even the weaker rand could support share prices. The rand, which is currently at its softest levels since the middle of August, recovered from R13.36 to R13.25 to the dollar on Wednesday, but lost ground again on Thursday and at mid-morning was again trading at R13.35/$.

Lower interest rates are actually not good for the rand, as it makes investments in South Africa less competitive compared to other emerging markets.

The All-share index at mid-morning was 0.12% lower at 55 799 points, while the Top 40 index traded 0.10% down to 49 524. The Financial index, which is highly sensitive to interest rate movements, lost 0.34% and the Industrial index 0.02%.

The Gold index shed 2.68% but the Resources index was 0.03% in the black, after Anglo American’s [JSE:AGL] share price jumped 3.05% to R230.08. Anil Agarwal, an Indian mining billionaire, plans to purchase as much as £1.5bn worth of additional Anglo American shares, which will increase its stake in the group from the current 12.43% by 9%.

Sasol [JSE:SOL], which lost more than 6% on Wednesday on news that the company will write off more than R12bn on its empowerment scheme which was cancelled, was unchanged at R372.96 after the company announced details of a new scheme.

Imperial [JSE:IPL] was one of the busiest shares on the JSE for the second consecutive day, but the share price lost 0.94% to R193.16. Mike Lamberti, Imperial’s chief executive, said he will push ahead with his plan to split the company next year unless South African political turmoil or a sovereign rating downgrade forces a delay. 

The share price gained 22% over the past 90 days on the news. Lamberti said the planned separation of the vehicles and transportation businesses into two Johannesburg-listed entities “is taking up 30% of top management’s time”.

Naspers [JSE:NPN] crept closer the R3 000 level and traded 0.46% higher than the day before at R2 985.98. Its Chinese subsidiary, Hong Kong Stock Exchange-listed internet giant Tencent, was 0.23% higher on a new high of $KH$247.20.

Richemont [JSE:CFR] was 0.15% softer at R118.17, but Aspen [JSE:APN] traded 0.65% higher at R305.30.

Steinhoff Retail Africa [JSE:SRR], which was listed on Wednesday, gained 2% to R21.90. It is now 6.8% higher than the issue price of R20.50, valuing the company at more than R70bn. This is even higher than Woolworths [JSE:WHL], which was previously the biggest retail share. Woolworths was 0.80% lower at R60.40.

Kumba’s [JSE:KIO] share price is still remarkable resilient, gaining 0.15% to R211.37 despite news that iron ore price has been dragged back into the $60s level after getting hit by a barrage of bad news, with persistent concern about rising global supply and fresh questions about the outlook for demand in China.

The benchmark spot price for ore delivered to Qingdao slumped 10% in the past four days, ending at $68.85 a dry metric ton on Tuesday, the lowest since July.

ArcelorMittal [JSE:ACL] however shed 5.2% to R4.56. The share has already lost more than 58% for the year to date.

Standard Bank [JSE:SBK] was 0.96% softer at R161.58 and Barclays Africa [JSE:BGA] lost 0.67% to R140.90.

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