Johannesburg - South Africa's poor economic prospects seemed to be on the forefront of investors' minds on Friday at the JSE, as most local indices have barely been in the back despite steadier world markets.
Although European markets were heading for their worst week in about five months, the major European indices were higher at mid-morning on Friday as investors were seeking direction ahead of the latest US jobs report due to appear later in the day.
Most major indices on the JSE were initially down, but recovered somewhat by mid-morning to be only marginally higher. Investors' attention was on the International Monetary Fund’s latest overview of the South African economy, which indicated the economy is not likely to grow by more than 0.1%.
READ: IMF cuts SA growth projection, adding to economic turmoil
Such poor growth can persuade the major international credit rating agencies to downgrade South Africa’s credit rating to junk status when the ratings are reviewed later this year.
By mid-morning the All-share index was only 0.13% higher at 51 162 points, while the Top 40 index traded only 0.08% stronger at 44 837 points. The Financial index was at that stage 0.16% up and the Industrial index 0.14% firmer.
European markets were supported by higher prices for mining shares on the back of firmer metal prices due to the weaker dollar, but that did not help the Resources index on the JSE which at mid-morning was still 0.06% softer. Anglo American [JSE:AGL] and Glencore [JSE:GLN], which in early trade in London were between 1% and 2% higher, both traded lower on the JSE. By mid-morning Anglo had lost 0.79% to R143.60 and Glencore was 0.54% down at R31.60.
The platinum industry faces another tough round of wage negotiations, with the Association of Mineworkers and Construction Union planning to demand a minimum wage of R12 500 for all workers. Anglo American Platinum [JSE:AMS] lost 1.58% to R384.49, but Impala Platinum [JSE:IMP] was 0.39% stronger at R51.75.
The Gold index gained another 1.88% and DRDGold [JSE:DRD] traded 4.24% higher at another 52-week high of R11.56.
World markets were struggling for direction on Friday as investors continued to divert money from stocks to government debt, with the yield on 10-year US Treasury bonds close to record lows. Yields were on course for a run of seven weekly declines - something not seen since mid-2012.
Attention was also focused on the latest US jobs data due later on Friday. It is expected to show jobs growth of 175 000 last month and a slight pick-up in wage growth, but investors remain wary given the unexpected negative surprise in May.
Analysts said if the data is weak again, the negative mood that prevailed at the start of the week is likely to return with a vengeance.
The first measure of UK consumer confidence since the Brexit referendum two weeks ago showed the steepest decline in more than five years, according to research company GfK on Friday.
The STOXX Europe 600 index was marginally up by mid-morning. However, it has fallen more than 3% so far this week and remained on track for its biggest weekly percentage drop since the middle of February.
Barclays Africa [JSE:BGA] and FirstRand [JSE:FSR] were the busiest shares in the beleaguered financial sector. At mid-morning Barclays Africa was only 0.07% stronger at R136.56, but FirstRand traded 0.85% lower at R43.28.
In the industrial sector, Richemont [JSE:CFR] continued to be under pressure and the share reached a new 52-week low of R82.12, 1.95% softer than the previous day’s close. As recently as November 3 last year the stock was at a 52-week high of R120.58, but since then has lost almost a third of its value on concern about global economic prospects, particularly in China.
MTN [JSE:MTN], which gained more than 10% over the past 30 days since it reached a agreement with the Nigerian authorities over its massive fine, traded 0.93% higher at R140.35. Steinhoff [JSE:SHF], which lost more than 10% over the past month, was 0.45% softer at R81.63.
Sasol [JSE:SOL] gained 0.33% to R386.28. The share lost almost 20% over the last month since the company announced an earnings drop. Investors are also concerned about cost overruns at its new plant in Louisiana in the United States.