JSE slips on Fitch downgrade

Johannesburg - South African stocks retreated on Friday after the Fitch rating agency cut the country’s outlook to negative from stable, while weaker global markets also dampened sentiment.

Fitch said it downgraded the outlook for the economy because it had seen limited progress on several long-standing structural issues, including unemployment, that have caused the country’s economic performance to fall behind its peers.

“The market has had a good run so far this year but there’s very little to justify that,” Louis Venter, a portfolio manager at Anglorand Securities, said. “Fitch has also lowered our outlook and that can’t be good for the market.”

The JSE Top 40 - Tradeable) [JSE:J200] blue-chip index was off 0.34% at 29 333.57 and the broader All Share [JSE:J203] index slipped 0.25% to 32 927.36.

Charts also suggested the benchmark index’s gains would be limited in coming sessions. The Top-40’s slow stochastic is near 70 while its 14-day relative strength index, or RSI, is around 60.

Traders who use these gauges of momentum usually consider an instrument to be overbought when its slow stochastic and RSI hit the 80 and 70 mark, respectively.

Among equity movers, discount retailer Massmart dropped 2.16% to R178.76, pulling back from a lifetime higher achieved this week after saying first-half sales rose more than 15%.Shares in rival Shoprite were down 1.74% at R135.11 ahead of the grocer retailer’s sales update next week.

Grindrod gave up 1.1% to R14.35 after Africa’s biggest shipping firm warned shortly before the market closed on Thursday that full-year profit likely fell as much as 45%.

Among gainers, African Bank was 1.2% at R34.40 and Investec improved 1.1% to R45.11.