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Cape Town - Share prices on the JSE continued to drift aimlessly lower on Tuesday and the local stock market is in desperate need of a major stimulus.
The JSE has been on the slide for the past month and not even strong global markets, with Wall Street yet again at new records, could breathe some life into the market.
Local investors seem to prefer the sidelines these days as the political debate around Finance Minister Pravin Gordhan, control of the Treasury and the concerted campaign by radical politicians against the South African banking system create a great deal of uncertainty.
The latest set of company results are also a mixed bag, indicating difficult economic conditions and raising concerns on the valuation of some of the top shares on the JSE.
The strong rand also put a damper on the local markets. The currency was somewhat softer on Tuesday but was still trading at R13.00 to the dollar, a level last seen more than a year ago.
The firm rand has a negative influence on the results of JSE heavyweights, which earn a major part of their income abroad, particular commodity companies. A typical example is Sasol [JSE:SOL], whose headline earnings were more 38% lower due to the influence of the strong rand.
The company said a move of 10c in the exchange rate of the rand has an influence of R470m on its revenue. The share price, which lost more than 10% over the past 30 days, was however resilient and traded 0.40% higher at R376.51.
Some analysts hope US President Donald Trump could provide the impetus the local market needs when he addresses a joint sitting of the US congress in Washington on Tuesday evening.
Trump said he would make a "big" infrastructure statement, which could be good news for commodities demand.
The resources sector was the JSE’s big driver in 2016, but it has been almost 10% weaker over the past month and lost another 0.89% on Tuesday morning.
That contributed to the All-share index trading 0.54% lower at 52 218 points, while the Top 40 index - which consists mainly of the big dual-listed shares - was 0.60% lower at 44 194 points. The Industrial index lost 0.50% and the Financial index shed 0.57%.
The biggest loser was the Gold index, which traded 4% down hammered by a softer gold price and the strong rand, which meant that gold mining companies earn less in rand for their gold.
Among the biggest losers in the gold sector was DRDGold [JSE:DRD] which lost 5.18% to R6.95, Harmony [JSE:HAR], which traded 5.25% softer at R31.95, Sibanye Gold [JSE:SGL], which dropped 4.93% to R26.41 and Gold Fields [JSE:GFI] which shed 4.57% to R39.29.
Anglo American [JSE:ANG] and BHP Billiton [JSE:BIL], which both lost about 6% over the past week, were again lower. Anglo American lost 1.3% to R201.41 and BHP Billiton 0.83% to R210.26.
Bidvest [JSE:BVT] was the biggest loser among the conglomerates, trading 4.13% softer at R156.56. The company increased its headline earnings by 5.6% to R1.7bn and said it is looking at expansion opportunities abroad.
Steinhoff [JSE:SNH] at mid-morning was 1.02% higher at R71.62, but in earlier trade the share was more than 2% stronger at R73.00. The company announced strong sales growth in the last quarter of 2016. Revenue increased by 45% compared to the same quarter in 2015 due to the newly acquired Mattress Firm and Poundland businesses. Excluding these acquisitions, group revenue rose by 11%.
Nedbank [JSE:NED] was 0.40% higher at R245.53 despite modest results in difficult trading conditions. The company reported its slowest growth in annual profit since 2009.
