JSE seeking direction after volatile week

Johannesburg - Share prices on the JSE were seeking direction on Friday after a busy week characterised by high volatility amid a Chinese meltdown.

The Chinese central bank shocked the world by devaluating its yuan currency, which will make exports to China less competitive.

By Friday the uncertainty about the devaluation was mostly discounted and analysts said investors' attention will return to the possibility that the Federal Reserve could raise US interest rates as early as next month.

This means the market could move more decisively later in the day after some US economic indicators are released.

By midday on Friday the All-share index on the JSE was only 0.27% lower at 51 239 points, and the Top 40 index lost 0.30% to trade at 45 742 points.

On Friday morning the All-share was 2.03% lower for the past seven days after the week's volatility. The index has mostly been moving sideways for the past three months, losing 1.61% over the past 30 days and 1.63% over the past 90 days.

The Top 40 index is 2.22% lower over the past seven days, 1.61% over the past 30 days and 0.37% over the past 90 days.

The Resources index was the best performer and traded 1.38% higher, but the Financial index lost 0.60% and the Industrial index 0.55% after one of its biggest components, Naspers [JSE:NPN], lost 1.54% to R1 723.00.

The Gold index was 1.42% lower, but is still more than 9% higher for the week after the uncertainty about the Chinese devaluation led to a short rally in the gold price. That came to an end on Thursday, when traders started to cover short positions.

Attention returned to US interest rates, after strong US retail sales data on Thursday provided evidence in support of views that the Fed is on track to hike.

US retail sales rose in July and were revised up for June, while the trend of weekly jobless claims pointed to a tightening job market.

"Every new data continues to solidify the likelihood of a September rate hike," Angus Nicholson, market analyst at IG in Melbourne, wrote in a note.

US industrial production statistics and the producer price index will be announced later on Friday and good numbers will increase the prospect of further interest rate hikes.

Standard Bank [JSE:SBK] said its first-half profit rose 61%, but the share price did not respond and at midday was 1.69% lower at R152.08. The increase was mainly due to the sale of its Brazilian operations and part of its London unit.

Standard Bank completed the sales of its London-based global-markets business to the Industrial & Commercial Bank of China and sold its entire interest in Brazil’s Banco Standard de Investimentos during the six months. The lender also benefited from an insurance claim on missing aluminium stockpiles in China.

The banking group warned however that South Africa faces “downside risks such as uncertainty in the labour market, inconsistent domestic electricity supply, prices of mining-related commodities and vulnerable global growth”.

There was also brisk trade in Sanlam [JSE:SLM] and Old Mutual [JSE:OML], with Sanlam losing 1.08% to R64.79. Old Mutual was 0.3% lower at R43.87.

Pioneer Foods [JSE:PFG] was one of the busiest shares on Friday morning and 1.03 million shares were traded for R213.7m. The share price increased by 3.64% to R207.27.

Sun International [JSE:SUI] was one of the biggest losers, despite a trading statement that earnings per share are likely to be 65% to 75% higher than a year ago. The improved performance is predominantly due to restructuring initiatives across the group.

The share price was however 4.50% lower at midday at R170.16, as indications are that the local tourism industry is under pressure due to a fall-off in overseas visitors.

Shoprite [JSE:SHP was also under pressure and lost 3.94% to R160.10.

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