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Johannesburg - Financial shares on the JSE followed their European counterparts higher on Thursday, which also gave the rest of the market a marginal lift.
European financial shares were discounting the possibility that the Bank of England (BoE) would cut interest rates to a record low later today to stave off a recession in Britain.
Analysts said banking shares were also buoyant after Nedbank's [JSE:NED] strong results earlier in the week. Although its drop in credit impairments was not in line with Barclays Africa’s [JSE:BGA] results, which announced an increase in bad credit, some analysts think that Barclays Africa was conservative in its impairment policy. Nedbank and Barclays Africa were both higher by mid-morning on Thursday.
At that stage the Financial index was already 1.04% higher, but the All-share index was only 0.21% firmer at 52 642 points and the Top 40 index was 0.20% up at 45 652 points. There was not much happening on the rest of the market, with the Industrial index only 0.04% stronger and the Resources index losing 0.08%. The Gold index shed 3.41% on the back of a lower gold price.
World markets were focused on today’s BoE meeting and European markets were higher, although the FTSE 100-index in London was not as strong as other European markets. The big shares on the JSE normally take their cue from London, as most of them are also listed there.
The BoE is expected to cut its interest rate by at least a quarter percentage point to 0.25%, making its first reduction since 2009 in a bid to ward off a recession that appeared increasingly likely after the United Kingdom voted to quit the European Union in June. Analysts said such a cut has already been discounted by markets, including the pound sterling, and there could be a reaction if it did not happen.
Many market players also believe the BoE may resume its multi-billion pound quantitative easing programme of government bond purchases.
Britain's economy is slowing at its fastest pace since the financial crisis, based on Markit's monthly all-sector purchasing managers' index on Wednesday, which recorded the steepest month-on-month decline on record.
Earlier this week it was also announced that manufacturing and construction were contracting, and that business confidence was plummeting.
The big four banks in South Africa all traded higher, with Nedbank gaining 2.7% to R214.05. Nedbank has been the best performer among the banks on the JSE over the past 30 days, gaining more than 9%, but the share price is still 19.7% softer for the past year.
Barclays Africa was 1.95% stronger at R159.05 and Standard Bank [JSE:SBK] traded 1.89% higher at R142.654. FirstRand [JSE:FSR] was the busiest share among the banks and at mid-morning gained 1.25% stronger to R49.29.
Among the ten biggest shares on the JSE, Naspers [JSE:NPN] traded 0.61% higher at R2 148.00 and MTN [JSE:MTN] gained 1.27% to R134.21.
The three biggest shares on the JSE in terms of market capitalisation were all lower. Anheuser-Busch InBev [JSE:ANB], the largest share, lost 2.96% to R1 695.00 and British American Tobacco [JSE:BTI] was 2.99% softer at R862.19. SABMiller [JSE:SAB] dropped to below R800 per share after it traded at a 52-week high of R990.00 on May 29. By mid-morning it was 1% lower at R795.91.
In the resources sector the two biggest platinum shares, Impala Platinum (Implats) [JSE:IMP] and Anglo American Platinum (Amplats) [JSE:AMS], both reached new 52-week highs. Implats was 0.74% stronger at a high of R63.97 and Amplats lifted 0.57% to a high of R462.89.
In the gold sector DRDGold [JSE:DRD] lost 7.46% to R11.41 and Gold Fields [JSE:GFI] was 5.25% lower at R86.22.
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