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JSE quiet as market awaits Reserve Bank data

Johannesbug - The JSE was still seeking for direction on Monday morning, and most indices hardly moved as the market awaited fresh indications on the state of the economy. The JSE started the day lower but recovered to be just in the black.

The South African Reserve Bank releases its latest quarterly bulletin on Tuesday and indications are that it will not paint a pretty picture on the state of the South African economy.

Analysts are particularly worried about the possibility that the deficit on the current account has widened in the second quarter. Analysts polled by Reuters expect it to widen to 5.45% of gross domestic product from 4.5% in the first quarter.

If the deficit is stubbornly high, and South Africa’s mining and manufacturing production does not improve to give exports a boost, it might force the Reserve Bank to raise interest rates even further to attract foreign capital to finance the deficit.

Shortly before midday on Monday the All-share index was only 0.11% higher at 51 848 points, while the Top 40 index gained 0.09% to 46 429 points.

Latest jobs data from the United States, released on Friday, was far below the expectations of economists and analysts. This is good news for the market as it dampened the prospects of an early Federal Reserve interest rate hike, which in turn helped the Standard & Poor’s 500 index reach another record.

If American interest rates remain low, it will encourage investors in developed markets to seek higher yields in emerging markets like South Africa, which desperately needs that capital to finance its current account deficit.

"US markets perceive data with optimism. Even the bad jobs figures have been interpreted as a likely sign that the Fed won't speed up its stimulus tapering programme any time soon," said SMBC Friend Securities strategist Toshihiko Matsuno.

The Financial index was the only JSE index which slipped on Monday morning. Shortly before midday it was 0.32% lower, after recovering some of its earlier losses. Three of the four big banks traded lower on Monday morning, with Barclays Africa [JSE:BGA] losing the most.

Barclays Africa traded 0.55% lower at R271.00, with Standard Bank [JSE:SBK] 1.18% weaker at R138.35 and Nedbank 1.18% [JSE:NED] softer at R9.75. The only bank to improve on Monday morning was FirstRand [JSE:FSR], which is releasing its results this week. The share traded 0.74% stronger at R46.19.

The market learned over the weekend that Barclays Africa and Standard Bank are facing competition in Africa from a new banking group founded by Bob Diamond, former chief executive of the Barclays group.

Atlas Mara, Diamond's African investment vehicle, has lifted its stake in Union Bank of Nigeria to almost 30% with a $270m investment which is its biggest deal to date.

It marks the third significant acquisition by Atlas Mara, set up last year by Diamond and Africa-based entrepreneur Ashish Thakkar with the goal to become Africa's leading bank. It raised $300m last month to add to its acquisition war chest.

UBN has 340 branches across Nigeria and had about $6.3bn in assets, $3.1bn in deposits and $1.3bn in equity at the end of June.

The Resources index, a big loser last week on base metal price concerns, recovered on Monday by only 0.12% after a weak start. The gold index also made up for last week’s sharp losses with a gain of 0.97%.

Among the heavyweights in the sector Anglo American [JSE:AGL] was still 0.55% down at R271.00; BHP Billiton [JSE:BIL] lost only 0.21% to R330.48. Kumba Iron Ore [JSE:KIO], which lost 7% of its value on concerns about low iron prices, regained 0.88% on Monday morning and traded at R298.

Among the gold shares AngloGold Ashanti [JSE:ANG], which lost 8% last week, gained 0.76% to R167.42, but Harmony [JSE:HAR] was another 0.51% lower at R29.05 after losing almost 10% last week.

Sasol’s [JSE:SOL] share price increased by 0.80% after the petrochemical giant reported a 14% increase in full-year earnings on Monday, boosted by higher chemical prices and a weaker rand.

Read: Weak rand boosts Sasol earnings

Diluted headline earnings per share rose to 59.64 cents from 52.53c the previous year, below a Reuters forecast of 63.4c, based on a poll of 11 analysts.

Sasol said the economic outlook in its domestic South African base "remains challenging as the country is still recovering from a five-month long strike in the platinum sector, with business and consumer confidence levels remaining low".

 - Fin24
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Rand - Dollar
18.89
+0.2%
Rand - Pound
23.87
+0.1%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.32
+0.1%
Rand - Yen
0.12
+0.1%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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