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Johannesburg - Global markets, including the JSE, followed Wall Street lower on Friday morning after US markets retreated on Thursday evening for the first time in four sessions on disappointing company results.
The JSE, where share prices also went downwards on Thursday afternoon after Anglo American’s [JSE:AGL] disappointing production results gave the market a reality check, slipped further on Friday but losses were mostly moderate.
Earlier in the day Asian shares, except for those listed in Tokio, also dipped while disappointing company results pushed the European markets lower.
American companies’ results for the first quarter have mostly beaten projections so far, helping shares to the highest level since early December. However, technology giants Google parent Alphabet and Microsoft dimmed the picture on Thursday as their earnings fell short of analysts’ forecasts. Sony also reported an annual profit that was 9% down on its January prediction.
“There’s been scant evidence of sustained earnings growth,” said Matthew Sherwood, head of investment strategy at Perpetual in Sydney.
At mid-morning the All-share index on the JSE was 0.52% softer than the previous day and the Top 40-index 0.46% down at 46 628 points.
All the major indices were down with the Financial index losing 0.63%, the Industrial index 0.51% and the Resources index, the star of the past week, 0.64%.
The catalyst that turned the market lower was a production report by Anglo American stating that output from its units Kumba [JSE:KIO] and Anglo American Platinum (Amplats) [JSE:AMS] fell by 27% and 52% respectively.
When these production figures were announced Anglo’s share price had gained more than 100% over the past three months, Kumba 236.8% and Amplats 134%.
Anglo’s share price dropped 6.8% after the news, trading 0.96% lower at R150.95 by mid-morning. Amplats lost 5.64% on Friday morning to trade at R391.83.
The production drop however had no influence on the rally in Kumba’s share price. The stock climbed 10.84% on Thursday and by Friday mid-morning was 6.82% higher at R131.35, after trading as low as R25.35 in January.
Exxaro [JSE:EXX], which holds a stake in Kumba, gained 3.62% to R89.94 and the share is now 103.4% higher over the past three months.
Analysts said Kumba’s production figures were lower than the market expected, but investors clearly chose to focus on the massive iron ore price hike. Iron ore for immediate delivery to China's Tianjin port jumped 6.8% to $68.70 a tonne on Thursday, the highest since January 9 this year.
The iron ore price is supported by a rally in steel prices, with Shanghai steel futures more than 60% higher for the year to date.
BHP Billiton [JSE:BIL], which also has a huge interest in iron ore, traded 0.57% higher at R201.40.
South 32 [JSE:S32], which was unbundled from BHP Billiton recently, was also in the spotlight after news that the company has resumed manganese mining activity in South Africa and expects the reconfigured operation to increase its flexibility to respond to market demand.
The share price however did not respond, and the stock traded 2.60% lower at R18.39.
MTN [JSE:MTN] traded 1.95% down at R146.50 after the company announced on Thursday that its Nigerian subscribers dropped by 6.9% to 57 million in the first quarter, after more than 4.5 million subscriptions in the country were cancelled due to security requirements. The company still faces a fine of $3.9bn for its failure to cancel these subscription timeously.
Subscribers in South Africa fell by 1.7% to 30.1 million, which means the total subscriber tally at the end of March was 1.4% down on the previous quarter.
Vodacom [JSE:VOD] on the other hand was 0.58% higher at R167.74, just below the 52-week high of R167.91 reached earlier in the week.
