JSE falls in line with global markets

Cape Town – The major indices on the JSE ticked lower on Tuesday in line with global equity markets

The rand traded flat, hovering around R14.45 to the US dollar, after its sharp drop seen on Monday. General dollar weakness, combined with optimistic German economic data, saw the dollar slip against most currencies. 

Germany, meanwhile, reported the fastest pace of growth since the first quarter of 2011. It expanded by 0.8% during the three months to September.

German GDP grew at an annualized rate of 3.3%, compared with 2.6% in the second quarter, providing the latest evidence of an acceleration in the eurozone's biggest economy. The figures sent the euro up overnight, rising 0.5% to $1.1724. 

In the capital market, bond yields eased slightly as the local currency gained ground. The yield on the benchmark R186 2025 edged lower to 9.44%

At the close of the JSE, the All-Share index had softened by 0.51% matched by the blue-chip Top 40 slipping 0.48% after a promising start in the morning.

Financials traded flat, while Resources took a hit  to close the day down 2.31%. Industrials were down 0.07%.

The Gold mining index fell 3.81% with Anglogold [JSE:ANG] falling 4.22% to R137.45, Gold fields [JSE:GFI] down 4.01% to R54.75, Harmony [JSE:HAR] down 3.76% to R25.36 and Sibanye [JSE:SGL] losing 3.30% to finish at R19.61 per share.

READ: Wildcat stay away ends at Harmony's Kusasalethu gold mine

Impala Platinum [JSE:IMP] fell 7.44% to R37.10 dragging the resource index lower. Lonmin [JSE:LON], meanwhile, recovered 6.91% to trade at R12.99 per share, after having been under severe pressure of late.

Consolidated Infrastructure [JSE:CIL] dropped by more than 60%, closing at just R3.40 a share after the energy and gas company released a shock announcement that its previous forecast of earnings dropping by more than 55% would need to be revised even lower.  

Retailer Steinhoff dropped 2.94% to R53.87 while Massmart [JSE:MSM] ended the day down 4.05% at R106 a share.

Life Healthcare added 2.85% to trade at R25.66. It said in a trading update on Monday that headline earnings per share were expected to drop by up to 60% for the year to end-September.

Gold holds firm

Gold traded flat at $1 278 per ounce as prices continued to hold firm above the October lows.The sideways drifting trend for gold continues against a backdrop of strong global equity markets and a rising crude oil price.

In the US, the Congressional struggle over tax reform may also play into the hands of gold bulls, as many investors on Wall Street are banking on the delivery of a tax reform bill by the end of the year. 

Brent Crude eased slightly to $61.29/bbl as expectations that OPEC and other producers will extend their production cut agreement were offset by US drillers adding the most oil rigs in a week since June, indicating output will continue to grow. 

The increased price of oil combined with the weaker rand is set to squeeze the South African market in the coming months, with the price of fuel directly impacting food and transport costs.  

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