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JSE indices down on US jobs report jitters

Johannesburg - Selling pressure emerged again on the JSE on Friday morning as investors started to get nervous about the US jobs report due to be released on the day.

The nervousness was in line with world markets after Wall Street gave up almost all its early gains on Thursday. Major markets in Europe and Asia were also lower as they await news from the US which could have a drastic influence on markets in the near future. US futures were also lacklustre in early trade, another indication of nervousness.

By midday on Friday the JSE's All-share index was again below 50 000 points, trading 1.28% lower at 49 765 points. The Top 40 index was at that stage 1.39% weaker at 44 215 points, which means the index has again dropped below the significant level of 44 380 points.

The Top 40 index reached that level on Thursday, but analysts warned it would have to consolidate above this on substantial volumes to establish upward momentum. This is obviously not going to happen.

All the major indices on the JSE were lower by midday, led by resources and gold which lost 2.74% and 2.35%, respectively. The dollar will strengthen against a basket of currencies if the jobs report indicates US interest rates might rise soon, which would be bad for the gold price and other commodities.

The Industrial index lost 1.24% and the Financial index was 1.25% lower, despite a weaker rand which traded at R13.64 a dollar by Friday midday.

Indications are that the jobs report will not provide the Federal Reserve with any clear course of action on rates. The China downturn, and its impact on the global economy, has many now expecting that the Fed will refrain from undertaking its first rate increase since 2006 when it meets in 13 days.

The impact of a hike in US interest rates will however be so big on financial markets, particularly emerging markets and commodities, that traders remain nervous.

The current uncertainty could also be just an excuse for traders to bank profits after the previous two days' gains.

One example is the share prices of Anglo American Platinum (Amplats) [JSE:AMS] and Sibanye [JSE:], which dropped back on Friday after strong gains on Thursday. Amplats strengthened by 9% on Thursday and Sibanye by more than 3.5% on news that negotiations have started about a possible takeover by Sibanye of Amplat’s massive Rustenburg operations.

On Friday morning Amplats was 4.28% lower at R335.96, which made an end to a strong run over the past few weeks. Amplats rose 12.5% over the past seven days and 35.36% over the past 30 days as investors were discounting a possible deal or a separate listing of Amplats’ Rustenburg operations.

Impala Platinum (Implats) [JSE:IMP] dropped 0.64% to R44.96 which means that the share price dropped 33.41% over the past 30 days in sharp contrast with Amplats. Implats announced on Thursday it needs to raise R4m to finish new capital projects, which was not well received by the market.  

The beleaguered ArcelorMittal [JSE:ACL] was at midday at a new 52-week low of R9.44, 0.64% lower than the previous day’s close, but the stock earlier traded as low as R9.01. ArcelorMittal, which is battling to survive against cheap imports from China, has lost 37.95% of its value over the past 30 days.

African Rainbow Minerals [JSE:ARI] traded 2.70% lower at R67.10 on Friday after announcing a 58% drop in earnings due to lower commodity prices. The share price is now 38.95% lower than 30 days ago.

Sasol [JSE:SOL] was another victim of profit-taking after it gained 17.12% over the past seven days on the back of a strong recovery in the oil price. The oil price stabilised on Friday at $50 a barrel for Brent crude, and Sasol traded 2.87% lower on R434.51.

Among the other top shares, Naspers [JSE:NPN] lost 1.97% to R1 681.31 and BHP Billiton [JSE:BIL] was 2.17% softer at R225.32.

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Rand - Dollar
19.00
-0.3%
Rand - Pound
24.15
-0.1%
Rand - Euro
20.64
-0.3%
Rand - Aus dollar
12.38
+0.4%
Rand - Yen
0.13
+0.4%
Platinum
905.16
-2.0%
Palladium
1,006.63
+0.1%
Gold
2,154.73
-0.3%
Silver
24.92
-0.5%
Brent Crude
86.89
+1.8%
Top 40
65,996
-0.4%
All Share
72,197
-0.3%
Resource 10
53,320
0.0%
Industrial 25
99,852
-0.6%
Financial 15
16,590
-0.2%
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