Local stocks softer on downgrade fears

The JSE weakened on Tuesday primarily due to concerns that a downgrade from Moody’s is now a high probability given its downward revision of South Africa’s growth forecast. 

Weakness was not only limited to the local bourse as global markets also retreated on the back of concerns that the coronavirus would have much bigger impact on global growth. This was ignited by tech giant Apple Inc which flagged that it would miss sales forecasts due to the closure of most of its suppliers’ factories in China.

BHP Group also indicated that it expected slower growth in the coming reporting periods should the virus continue to have the current impact on productivity. Global stocks were trading softer across all the major economic hubs including the USA which resumed trading following a holiday on Monday.

Local investors shift their attention to SA inflation numbers which are expected to be released on Wednesday at 10.00 CAT. 

The rand remained mostly softer in today’s session as emerging market currencies continued to sell-off. The local unit reached a session low of R15.08/$ before it was recorded trading 0.28% weaker at R15.02/$ at 17.00 CAT. KAP Industrial Holdings [JSE:KAP] reported lower revenues and earnings in its half-year results, which saw the stock fall 7.51% to close at R3.20.

African Rainbow Capital [JSE:AIL] lost 6.32% to close at R3.56, while WBHO [JSE:WBO] fell 4.92% to close at R123.60 despite the company releasing a trading update indicating that they are expecting a jump in earnings. Barlworld [JSE:BAW] lost 4.64% to close at R94.80, while Grindrod [JSE:GDN] dropped 2.92% to close at R3.99.

Kumba Iron Ore [JSE:KIO] released a positive set of full-year results however, market sentiment weighed on the share as it fell 2.29% to close at R360.86. Declines were also recorded for South32 [JSE:S32] which lost 2.39% to close at R25.77 as well as Glencore [JSE:GLN] which closed at R44.77 after losing 2.25%.

Intu Properties [JSE:ITU] found some reprieve in today’s session as it rallied 10.22% to close at R2.48, while Liberty Two Degrees [JSE:L2D] managed to gain 2.94% to close at R6.30. Gold miners also found some momentum as gains were recorded for Gold Fields [JSE:GFI] which climbed 3.69% to close at R96.43, Harmony Gold [JSE:HAR] added 3.12% to close at R48.91, while DRD Gold [JSE:DRD] closed at R9.90 after rising 1.54%.

Losses were also recorded for Standard Bank [JSE:SBK] which gained 0.41% to close at R167.50, Imperial Logistics [JSE:IPL] which gained 1.07% to close at R51.01.

The JSE All-Share index closed 0.81% lower while the JSE Top-40 index lost 0.83%. All the major indices closed softer on the day. Industrials fell 1.02%, Resources lost 0.72% and Financials shed 0.58%.Brent crude was trading 0.88% weaker at $57.16/barrel just after the JSE close.

At 17.00 CAT, Palladium was up 1.92% at $2570.43/Oz, Gold had 0.75% firmer at $1592.70/Oz, and Platinum had gained 1.47% to trade at $983.24/Oz.

*Musa Makoni is a trading specialist at Purple Group

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