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Rampant rand reverses early JSE gains

Johannesburg - Another powerful performance by the rand, which traded as low as R13.66 to the dollar by mid-morning, again overshadowed proceedings on the JSE on Tuesday morning.

The JSE started higher in line with global markets, as investors judged Monday's sell-off on global markets after Italy’s referendum to be overdone.

The strong rand however changed the mood quickly as the big dual-listed shares on the JSE are worth less in rand if the currency strengthens. The local unit is still is supported by Standard & Poor’s decision to keep South Africa’s credit rating unchanged.

International currency markets are also in turmoil after the euro plunged to a 21-month low on Monday, after Italian Prime Minister Matteo Renzi resigned after he was defeated in a referendum on constitutional reform. There are fears that a new Italian government would consider leaving the euro and the European Union.

By mid-morning all the major indices on the JSE were lower, after Monday’s strong gains when the market rallied on the news that all three major international credit rating agencies kept South Africa’s credit rating intact at investment level.

The All-share index shed 0.70% to 49 367 points and the Top 40 index traded 0.82% weaker at 42 387 points. The resources index was pulled 1.62% lower by the big dual-listed commodity giants and Industrial index lost 0.67% as all big capitalisation shares lost ground. Financial shares treaded water after Monday’s strong gains and the Financial index traded only 0.19% softer.

The Gold index lost 0.33% as the gold price lost 0.84% to $1 170 per ounce, as uncertainty about Italy lessened somewhat. The gold price is now more than 11% lower than 90 days ago, and at one stage traded as low $1 154/oz.

The JSE’s demise was in contrast with better sentiment on world markets. The euro recovered somewhat on Tuesday and a strong Wall Street on Monday set the tone for world markets. Robust US economic data helped sentiment with Dow Jones industrials setting fresh record highs, following a services sector report showing further strength in the economy.

Services sector activity hit a one-year high in November with a surge in production boosting hiring, following on the heels of Friday's employment report that showed strong job gains last month.

Among the big shares in the industrial sector, Naspers [JSE:NPN] shed 1.51% to R1 950.00. Before Tuesday's trade the share was already 17% lower over the previous 30 days on fears of being overvalued.

British American Tobacco [JSE:BTI] lost 1.76% to R751.94 and Richemont [JSE:CFR] was 1.67% softer at R89.98.

BHP Billiton [JSE:BIL] lost 2.83% to R228.30 and Anglo American [JSE:AGL] was 1.89% softer at R211.52. Glencore [JSE:GLN] was however only 0.04% down at R49.95 as the company benefited from the current copper price surge.

Sasol [JSE:SOL] was 0.46% higher despite new uncertainty about the future movement of the oil price. The oil price, which rose to a 16-month high of more than $55 per barrel, lost more than $4 on Tuesday on news that Opec's oil output set another record high in November ahead of a deal to cut production. The increase was due to higher Iraqi exports and extra barrels from two nations exempted from cutting supply - Nigeria and Libya.

In the financial sector FirstRand [JSE:FSR] was 0.04% softer at R51.14, after the share reached a new intraday high on Monday. Standard Bank [JSE:SBK] was only 0.19% higher at R149.99 and Barclays Africa [JSE:BGA] gained 0.22% to R161.51.

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Rand - Dollar
18.90
+0.2%
Rand - Pound
23.86
+0.2%
Rand - Euro
20.36
+0.3%
Rand - Aus dollar
12.31
+0.3%
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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