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Johannesburg - The JSE was in limbo on Friday morning as the market awaits Moody’s new rating on South Africa later in the day, with very little direction from world markets as Wall Street was closed on Thursday for Thanksgiving.
The rand was however remarkably strong as the Thanksgiving break helped slow a relentless surge in the dollar that has sucked capital out of most emerging markets. By mid-morning the local unit traded 0.43% stronger at R14.07 to the dollar.
Fears of South Africa having its credit rating downgraded to junk have intensified amid worsening unemployment figures and sustained weak domestic demand.
By mid-morning on Friday all major indices on the JSE were down, although most of the losses were quite modest.The All-share index was at that stage 0.51% down at 50 304 points, while the Top 40 index was 0.65% lower at 43 794 points.
The resources index was 1.02% down after strong surges earlier in the week. The Financial index was 0.46% lower and the Industrial index lost 0.48%, capped by the relative strong rand.
Attention is not so much on Moody’s rating later on Friday but on the rating agency’s outlook for the future.
If Moody’s downgrades South Africa’s sovereign rating from its current rating of two levels above junk, it will still be one notch away from sub-investment grade. But its outlook will give a good indication of what can be expected from Standard & Poor’s rating decision next week. S&P’s rating is one notch lower than Moody’s, and a downgrade could mean junk status.
The two big guns in the resources sector, Anglo American [JSE:AGL] and BHP Billiton [JSE:BIL], which both closed on new 52-week highs on Thursday, were slightly lower on Friday. Anglo American, which closed on a high of R220.70, lost 1.16% to R218.15 and BHP Billiton traded 0.24% softer than Thursday’s record close of R240.88 at R240.30.
Glencore [JSE:GLN] started the day positively and reached a new intraday 52-week of R51.38 in early trade. By mid-morning it was 0.50% softer at R50.24. African Rainbow Minerals [JSE:ARI] lost 0.45% to R110.05. Iron producer Kumba [JSE:KIO] was 0.43% higher at R170.34.
Naspers [JSE:NPN] traded 0.73% softer at R 2051.00, although the market expects strong results next week. The share is now 3% lower for the past week and almost 10% down for the past month. British American Tobacco [JSE:BTI] lost 0.60% to trade at R766.43. The share is more than 8% lower for the past month.
Retail shares were in the spotlight again, despite indications that consumer demand is under pressure. The Foschini group [JSE:TFG] gained 1.73% to R147.52 and Mr. Price [JSE:MRP] was 1.47% stronger at R147.39.
FirstRand [JSE:FSR], which reached a new 52-week high of R52.15 in the week, shed 0.36% to R50.13. The share is still 14.73% higher over the previous 30 days. Standard Bank [JSE:SBK], closed on a 52-week high of R155 on Monday, lost 0.67% to R149.09.
