Johannesburg - Share prices were mostly lower on Friday morning as the market’s attention turned to the rand, which strengthened to its best level in a week on the back of a weaker dollar.
READ: Rand firmer on risk appetite boost
The local currency traded at R14.21 to the dollar as the US currency reached its lowest level in 18 months against the yen. The dollar was still reeling from the news that the Bank of Japan does not plan further stimulatory measures, as well as Thursday’s announcement that the US economy grew at the slowest pace in two years in the first quarter.
The strong rand was however bad news for local shares, particularly those which earn most of their income abroad in dollars, as they earn less in rand with the local currency at present levels.
Investors were also concerned about a report by credit rating agency Standard & Poor's, which warned that South African banks' profits will be under pressure in the next few years due to the deteriorating economy and an increase of bad loans as a result of weaker growth.
READ: SA banks under pressure as economy stumbles
Most of the major indices on the JSE were moderately down by mid-morning on Friday, with the exception of the Gold index which strengthened further on the back of gains in the gold price due to the weaker dollar.
At that stage the All-share index was only 0.35% lower at 53 037 points, which meant the local market will probably end the week slightly in the red after mostly moving sideways. Before Friday’s trade the All-share index was only 0.29% lower for the past seven days. The Top 40 index, which lost 0.29% over the same seven days, was 0.48% lower at 46 568 points.
The influence of the strong rand was particularly evident in the Industrial index - which includes various big dual-listed conglomerates - which lost 0.37%. The Resources index shed 0.07%, with the prices of top commodity shares a mixed bag. The Gold index was however 1.75% higher after the gold price gained $9 to trade at $1 275.50 per fine ounce.
Financial shares were the biggest losers on the back of the S&P report and at mid-morning the Financial index was already 0.96% down. The share prices of the four big banks were all lower.
FirstRand [JSE:FSR] traded 2.41% lower at R46.14 and Standard Bank [JSE:SBK] dropped 1.81% to R128.02. Barclays Africa [JSE:BGA] was 1.47% softer at R147.46 and Nedbank [JSE:NED] lost 1.24% to R182.70. Old Mutual [JSE:OML], which owns the controlling stake in Nedbank, shed 0.56% at R39.00.
Naspers [JSE:NPN] was one of the rand hedge shares in the industrial sector that lost ground and traded 1.44% softer at R1 973.21. Anheuser-Busch InBev [JSE:ANB] traded 2.8% lower at R1 779.94 after the company indicated in correspondence to the European Union that it intends to sell SABMiller’s [JSE:SAB] brands in Eastern Europe to comply with competition requirements. SABMiller was 0.05% stronger at R870.17.
Anglo American [JSE:AGL] was 2.91% higher at R157.44 in the resources sector, but BHP Billiton [JSE:BIL] was 2.51% softer at R192.08. Iron ore producers Kumba [JSE:KIO] and Assore [JSE:ASR], which are both more than 200% higher than three months ago, both lost ground. Kumba shed 0.46% to R117.96 and Assore was 2.52% down at R190.08.
The platinum price also strengthened and platinum shares were higher. Impala Platinum [JSE:IMP] gained 3.26% to R58.86 and Anglo American Platinum [JSE:AMS] was 3.62% stronger at R403.73.
DRDGold [JSE:DRD] gained 7.39% to a new 52-week high of R7.56 and the share is now 210.90% higher over the past 90 days.