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By midday on Tuesday all the major shares were higher than the day before. This means that the JSE was marginally stronger on Tuesday, despite worse-than-expected news on the current account deficit, which sent the rand in a tailspin towards R10.90 for a dollar.
Read: Rand slumps on widening current account gap
At that stage the All-share index traded 0.36% higher at 51 798 points and the Top 40 index gained 0.47% on the stronger performance of dual-listed shares.
On Tuesday morning Imara SP Reid said in its daily market snapshot that the Top 40 index continued to move in a consolidation which has been in place since early July, which there does not seem to be enough momentum to break out of.
On Monday shares on the London Stock Exchange were under severe pressure when it became known that the result of the referendum on Scottish independence was in the balance with a possibility that the separatists could win, which could lead to the break-up of the United Kingdom.
The dual-listed shares listed in London were therefore also under pressure, particularly as the weaker pound against the rand made them even more unattractive.
But on Tuesday morning the FTSE stabilised and by midday was only 0.2% lower, while the rand weakened against all major currencies after the disappointing news on the current account deficit.
The shortfall on South Africa's current account widened more than expected to 6.2% of gross domestic product in the second quarter of the year from a shortfall of 4.5% previously. This came as the economy was hit by prolonged strikes and lower global demand, the South African Reserve Bank (Sarb) said on Tuesday.
Economists had expected a 5.45% gap.
In its latest quarterly bulletin, Sarb said declining commodity prices also severely dented the country's export performance in the quarter.
The rand as expected reacted negatively on the news and traded at a month low of R10.90 to the dollar by noon.
Locals look on the bright side
The local stock market however ignored the bad news on the deficit, concentrating rather on the advantages a weaker rand will have for companies which earn most of their income abroad. Mining companies are expected to benefit most and by midday the Resource index was 0.98% higher and gold gained 0.70%, although the gold price is still under pressure from a stronger dollar.
Glencore [JSE:GLN] was the dual-listed resources giant which performed the best on Tuesday morning by gaining 1.98% to R65.32. BHP Billiton [JSE:BIL] gained 1.31% to R333.01 and Anglo American [JSE:AGL] 0.87% to R270.43.
In the industrial sector SABMiller [JSE:SAB] improved by a strong 2.39% to R608.83 and Richemont [JSE:CFR] gained 1.64% to R104.10. British American Tobacco [JSE:BTI] was 1% stronger at R633.00. Naspers [JSE:NPN] however did not share in the gains and was 0.04% lower at R1 351.40. The Industrial index improved by 0.47%.
Financial shares are however still under pressure and the Financial index lost 0.70%. One of the big losers was FirstRand [JSE:FSR] which was 2.42% lower by midday at R45.48.
The group announced earnings growth of 22% on Tuesday morning, the best of all the banking groups.
- Fin24
