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Johannesburg - The JSE again lost ground on Monday as global political uncertainties continue to push world bond yields down.
Although the losses were modest, after two months in 2017 the market is now back at the levels reached at the beginning of the year, meaning that all gains from the first few weeks in January have again been lost.
The local market started the year on a strong note but has been in a steady decline since January 22, when it reached a high for the year.
Besides the uncertainties about US President Donald Trump’s policies, investors are also concerned about the growth of far rightwing policies in France which threaten to destabilise the European Union.
Investors fear far-right National Front leader Marine Le Pen might win the presidential election in France this year and lead France out of the eurozone. Polls show Le Pen losing to either centrist Emmanuel Macron or right-wing Francois Fillon, but few people are willing to count her out.
There are also concerns that valuations on global markets are becoming high. This could lead to a correction if those prices are not supported by earnings, particularly on Wall Street which reached yet another record on Friday.
The strong rand, which continued to trade at below R13.00 to the dollar on Monday, also put a damper on the dual-listed shares on the JSE, which represent most of the market’s value.
The All-share index at mid-morning was 0.27% softer at 51 472 points, almost 200 points below the 51 565 points at the beginning of the year. The index gained more than 3% in the first three weeks to reach a high of 53 405 points, but since then has been on a steady decline, losing 2.9% over the previous 30 days.
At that stage the Top 40, which includes most of the big dual-listed shares, was 0.30% softer at 44 447 points - only about 1% higher for the year. The index reached a high of 46 365 points on January 22, a gain of almost 5%.
The market was mainly pulled down by resources shares which were the star performers in 2016. The Resources index, which lost 9.36% over the previous 30 days, at mid-morning was 0.29% down on 31 870 points. At Monday’s level it is just below the 32 109 reached at the beginning of the year, but in January it was as high as 36 210 points - almost 15% up on the beginning of the year.
At mid-morning the Industrial index was 0.06% down at 66 303 points, still about 2% higher for the year. The Financial index was 0.49% softer at 15 046 points, almost unchanged from the 15 078 points on January 1 this year.
Sasol [JSE:SOL] attracted much attention on Monday morning, after announcing that it found promising signs of oil and gas in wells drilled off Mozambique.
The share price gained 1.21% to R374.90 after the company also announced that its capex estimate for the full year was cut to R66bn from R75bn “largely due to the impact of the stronger rand/U.S. dollar exchange rate coupled with our cash conservation initiatives and active management of our capital portfolio”.
Half-year headline earnings per share fell 38% to R15.12, in line with what the company previously flagged to the market. Sasol attributed the decline to rand gains and to a strike at its Secunda mining operations.
READ: Stronger rand knocks Sasol's profit
Anglo American [JSE:AGL] and BHP Billiton [JSE:BIL] were both higher. BHP Billiton gained 0.58% to R213.23 and Anglo American was 1.15% stronger at R204.41.
Naspers [JSE:NPN] lifted 0.50% to R2 132.97 and Steinhoff [JSE:SNH] was 1.14% stronger at R70.00. Bidcorp [JSE:BID], which gained more than 15% over the past seven days, fell victim to profit-taking and traded 0.62% softer at R266.83.
