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JSE slips as dollar puts commodities under pressure

Johannesburg - The JSE was moderately lower by mid-morning on Monday as the strong dollar continued to put pressure on commodity prices.

The resources sector was in fact the only big loser on Monday morning, but the index also recovered somewhat and was only 1.05% lower by mid-morning.

The result was that the All-share index traded only 0.25% lower at 52 504 points and the Top 40 index lost 0.33% to 46 376.

The Financial index, which is regarded as oversold, traded 0.46% higher but the Industrial index was a marginal 0.17% lower, as the rand recovered somewhat to R15.58 to the dollar in response to news that there are no plans to arrest Finance Minister Pravin Gordhan.

READ: Rand gains on news of no Gordhan arrest

The European markets were higher on Monday, except for the mining sector which suffered further losses as all major commodity prices - including oil, gold and platinum - were lower on Monday.

The big dual-listed commodity shares on the JSE were therefore also lower. Anglo American [JSE:AGL] lost 2% to R134.60 but the share earlier traded over 4% lower at only R134.60. BHP Billiton [JSE:BIL] was 1.61% softer at R183.30 but traded more than 3% weaker at R179.16.

Glencore [JSE:GLN] was 0.55% down and Lonmin [JSE:LON] only 0.35% weaker at R42.44. Lonmin gained 17.8% over the previous seven days.

The two iron ore producers, Assore [JSE:ASR] and Kumba [JSE:KIO], lost ground on Monday. Both shares are considerably lower than the highs reached towards the end of April, but still more than 200% higher over the past three months.

Assore traded 2.36% lower at R182.50. The share price reached a 52-week high of R217.78 as recently as May 4 after trading at a 52-week low of only R56 on January 12 this year. Kumba, which traded 3.60% softer at R87.57, reached a level of R127 on April 21 this year, after reaching a 52-week low of R25.30 on January 17.

The big fluctuations are the result of sharp moves in the iron ore price, which reached a level of $69 per tonne last month after being as low as $39 in January this year. The commodity traded at $56/t on Friday.

Anlgo American Platinum [JSE:AMS] shares bucked the trend and gained 3.14% to R387.04. The company said it is in talks with two South African entities to sell its labour-intensive Union mine, taking another step towards its goal of becoming a low-cost miner.

Focus in the industrial sector was on Richemont [JSE:CFR], one of the best-known shares on the JSE, which on Monday morning dropped to a 52-week low. The share traded 2.41% lower at R90.64. The previous low was R92.70.

Richemont shocked the market at the end of last week with a warning that its first-half results could be under pressure, as April sales dropped 18% compared to the previous year.

Although Richemont’s share price is only 1.55% down for the seven days before Monday’s trade, the stock is already almost 14% down for the year to date.

Investors seem happy with news that the Pioneer Food Group [JSE:PFG] reported a 6% rise in half-year profit on Monday, despite a severe drought that hurt its domestic operations. The stock gained 1.25% to R160.06. Pioneer’s share price is still 17% lower for the past year, but 0.74% higher for the year to date having gained 13.32% over the past 30 days.

Shoprite Holdings [JSE:SHP] gained 1.17% to R165.00 by Monday mid-morning on news that the retail group plans to invest $572m on new supermarkets and business units in Angola, as the Angolan government appointed a commission to negotiate potential tax breaks and other incentives for the company. The grocer will also upgrade its existing chain of Angolan stores.

Angola replaced Zambia as Shoprite’s biggest contributor of sales outside South Africa in the second half of last year. Shoprite has 2 188 stores across 15 countries, with the majority in South Africa.

MTN’s [JSE:MTN] share price lost 1.91% in morning trade on Monday on news that Nigeria has suspended talks with the mobile giant about a record $3.9bn fine, while the country’s House of Representatives completes an investigation into the size of the penalty and how it was delivered.

The communications group’s share price has been moving sideways for the past month as the market waits for the uncertainty about the fine to be cleared up. MTN is still 42.6% down for the year.

   
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Rand - Dollar
18.88
+0.3%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.32
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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