JSE treads water as world markets grapple with growth

Johannesburg - Sentiment on stock markets globally remained sombre on Thursday morning, as investors grappled with the apparently diminishing ability of major central banks to stimulate growth. The JSE responded by moving mostly sideways in morning trade.

The major indices had hardly moved by mid-morning on Thursday, with the All-share index only 0.06% higher at 52 533 points and the Top 40 index 0.11% firmer at 46 036 points.

Financial shares were at that stage 0.14% lower, with the Industrial index 0.07% higher and the Resources index 0.34% stronger.

Investors are increasingly concerned about perceived limits to the extensive monetary easing led by major central banks, such as the European Central Bank and the Bank of Japan. This has soured broader risk sentiment, driving global debt yields earlier this week to the highest levels in months.

Higher bond yields make share prices less attractive at a stage when investors are uncertain about high valuations in difficult economic conditions.

Emerging markets like South Africa are the hardest hit, heading lower for the fifth consecutive day. The MSCI Emerging Markets Index headed for its softest close in six weeks, with industrial and energy shares leading declines in nine of its 11 industry groups.

Markets are waiting for policy meetings next week by the Federal Reserve and the Bank of Japan. The Bank of Japan is due to review its policies, which could include controversial steps such as negative interest rates which are not regarded as sustainable. Although a hike in US interest rates is not on the cards now, investors are bracing themselves for action towards the end of the year.

The Bank of England is meeting on Thursday but is expected to do nothing after easing policy last month, amid signs it overestimated the initial shock to Britain's economy from June's Brexit vote.

The major shares on the JSE hardly moved. Naspers [JSE:NPN] was 0.25% higher at R2 460.79 and SABMiller [JSE:SAB] gained 0.30% to R835.28, with MTN [JSE:MTN] trading 0.17% higher at R121.31.

Steinhoff [JSE:SHF] was 0.54% down at R80.91 and Sasol [JSE:SOL] lost 0.33% to R385.24. Aspen [JSE:APN] shed 0.15% but in initial trading was more than 1% higher. The group said it is seeking further acquisitions and adding salespeople in China, as it targets the world’s most populous country as a major growth market.

Aspen will have 700 salespeople in China, its biggest sales team in the world, after completing a deal to buy a portfolio of anaesthetic medicines from GlaxoSmithKline for as much as R4.3bn earlier this week.

South 32 [JSE:S32], which gained more than 22% over the past 30 days, traded 0.78% lower at R24.20. The company will be included in the All-share index on Friday. Glencore [JSE:GLN], which will also become part of the index, gained 0.35% to R34.72.

Kumba [JSE:KIO] traded a solid 2.83% higher at R123.76, despite reports that the price of iron ore has hit a rough patch after a stellar run in 2016. Analysts said the prospect of a slump below $50 a metric ton is now back in view after the price of the raw material lost 5.8% in the past seven sessions to $55.97 a dry ton. That’s the longest run of daily declines since March, and has pegged back this year’s gain to 28% from as much as 62% in April.