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Johannesburg - South African shares hardly moved on Monday morning as the market awaits new indicators and the strong currency keeps rand hedge shares in check.
Solid US payroll data and stronger-than-expected manufacturing data from the US and China underpinned overseas markets, but the dollar remained weak following last week’s comments from Federal Reserve chair Janet Yellen that there are still major risks in the global economy and markets which will keep US interest rates low for some time.
By mid-morning the rand traded at R14.78 to the dollar, 0.44% stronger than Friday and at the highest level this year.
A strong rand means the major dual-listed shares on the JSE, which earn most of their income abroad, will receive less in rand for their sales.
By mid-morning the All-share index on the JSE was only 0.03% lower at 51 570 points and the Top 40-index lost only 0.01% to 45 479 points.
Among the major indices the Industrial index lost 0.07% and the Financial index was 0.14% softer, while the resources sector gained 0.16% on the back of stronger manufacturing data in the US and particularly China.
US stocks rose on Friday, with the S&P 500 gaining 0.63% to a three-month high after better-than-expected US jobs and factory numbers. The Asian and European markets were also higher on Monday.
Yet the cautious rate hike view expressed by Yellen last week still resonated among investors, limiting expectations of a near-term rate hike by the Fed and knocking the dollar down to the lowest level in seven weeks.
Analysts expect the rand to stay at current stronger levels for a while, as most of the bad economic and political news in South Africa has already been discounted and the dollar is expected to remain under pressure for some time.
SABMiller [JSE:SAB] was 0.12% lower at R888.95 and Richemont [JSE:CFR] traded 0.73% softer at R95.30. The luxury goods company lost 8.48% of its value over the past 30 days on concern about the Chinese economy. British American Tobacco [JSE:BTI] was however 0.39% higher at R859.24.
Sasol’s [JSE:SOL] share price stood at R433.08 as oil prices continue to show signs of fatigue after last quarter's rebound, extending their decline on Friday following comments from a powerful Saudi prince that raised doubts about the chance of any output freeze deal later this month.
MTN [JSE:MTN] traded 0.83% lower at R129.51, ignoring the good news that Standard & Poor’s affirmed the mobile giant’s credit rating on Thursday, despite the fact that it faces a $3.9bn fine in Nigeria. The rating agency said its decision is based on MTN holding back on dividends.
Naspers [JSE:NPN], which shed more than 5% over the previous seven days, made up some of those losses and traded 1.03% higher at R2 066. Steinhoff [JSE:SHF] gained 1.64% to R95.66.
