JSE closes lower as dollar rebounds

Cape Town - The JSE reversed some of the gains recorded in the previous trading session, as it traded in the red for the greater part of Tuesday.

Local equity markets failed to gain any considerable momentum from the open mainly on the back of some profit taking, as well as the weaker rand which dragged most of the retail and financial stocks lower. Naspers [JSE:NPN] traded weaker despite their associate, Tencent Holdings, closing slightly firmer on the Hang Seng in the morning session. This also aided in pulling the blue chip Top-40 Index lower.

The JSE All-Share Index eventually closed 0.88% lower; the Top-40 Index was down 0.91%. The Financials Index was down 0.77% on the back of the weaker rand, mainly dragged down by banking shares such as Standard Bank and First Rand which were down 1.86% and 1.07% respectively. General retail stocks were also under pressure, which saw Mr Price closing 1.50% weaker and Shoprite dropping 2.62%.

The Resources Index followed the trend in the broader All-Share Index eventually closing down 2.29%, as commodity prices remained under significant pressure. The weaker rand did not provide much relief with stocks such as Anglo American PLC and BHP Billiton being the biggest losers in the Top-40 Index, as they shed 3.54% & 3.11% respectively. Industrials were also weaker, closing the day down 0.43%.

The US dollar strengthened further as indicated by the US dollar index which was up just over 280 points when the JSE closed, as it managed to reach 2 week highs of 97.871. Our local currency weakened on the back of this move managing to reach lows of R13.10 against the US dollar before having a slight recovery to trade at 13.07/$ when the JSE closed.

Gold was weaker as investors sold-off the metal in favour of the US dollar which has managed to continue to strengthening against a basket of major currencies. The metal was trading at $1242.91 per ounce when the JSE closed after having managed to reach lows of $1241.40 per ounce during the session. Platinum and palladium were also trading weaker today, and were trading at $920.94 and $869.38 per ounce when the JSE closed.

Brent Crude took another hit as it broke below $46 per barrel, and it managed to reach lows of $45.69 per barrel, as news from Libya indicated that their production output had increased to four-year highs. Fuel storage levels have grown indicating yet again that there might be an oversupply of the commodity on the global market.

Although this might be bad news for producers, South African consumers can expect a bit of relief with regards to fuel prices in the near future should this trend persist.