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Johannesburg - Resources and other dual-listed shares were somewhat stronger by mid-morning, as the rand lost ground on reports that Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas, were recalled on Sunday from an international roadshow to London and New York and told to return to South Africa.
READ: LIVE: Reshuffle could be Part 1 of Zuma's ‘scorched earth strategy’ - economist
The Presidency later confirmed that President Jacob Zuma has instructed Gordhan and Jonas to cancel the investor roadshow and return to South Africa immediately.
This might indicate that Zuma's feared Cabinet reshuffle, replacing Gordhan as minister of finance, is finally on the cards. The rand reacted to the news by rising from R12.35 to the dollar to R12.58 in a matter of minutes.
READ: Rand plummets as Presidency cans Gordhan roadshow
That was good news for resources shares, as mining companies earn more in rand for their exports if the rand is weaker. The Resources index was 0.90% softer at mid-morning than on Friday, after it lost more than 1.6% in weaker trade.
The JSE continued its downward spiral of the last few days in line with global markets, which are still reacting to US President Donald Trump’s humiliating defeat in Congress on Friday when he failed to deliver on his campaign promise to recall the controversial Obamacare healthcare system.
There are now serious concerns in the markets about Trump’s ability to push through the tax cuts and fiscal spending he also promised in his election campaign to boost the US economy.
Global markets had a record-breaking run on so-called Trumpflation trades - betting on an extended recovery in the US and global economies and related assets based on Trump’s campaign promises.
Commodities were the major beneficiaries of the market’s run and these shares were globally under heavy selling pressure on Monday.
The Resources index was initially also the biggest loser on the JSE on Monday, although the losses were not as large as last week.
The share prices of all the commodity groups recovered some of their early losses. At mid-morning BHP Billiton [JSE:BIL] was 2.36% softer at R190.89, but earlier traded as low as R185.72. Anglo American [JSE:AGL] at one stage fell to R187.19 but recovered later to R193.25, 1.59% lower than Friday. Glencore [JSE:GLN] shed 2.61% to R48.95 after losing more than 3% in early trade to R47.19.
The All-share index and the Top 40 index were both more than 1% lower in early trade, but regained a major part of those losses. At mid-morning the All-share shed 0.53% to 51 543 points after reaching 51 278 points, and the Top 40 index was 0.43% softer at 44 469 points but traded as low as 44 073 points.
The setback for the rand came up at an inopportune time as indications at the annual Merrill Lynch Investor Conference at Sun City were foreign investors now have a positive bias towards a favourable political outcome in South Africa.
A softer rand and indications that interest rates in South Africa might start decreasing soon are bad news for financial shares, and the Financial index lost 0.93%. FirstRand [JSE:FSR] shed 2.48% to R51.15 and Standard Bank [JSE:SBK] was 2.43% softer at R155.14.
Industrial shares were a mixed bag, with the Industrial index only 0.37% lower. Naspers [JSE:NPN] lost 0.76% to R212.00 but British American Tobacco [JSE:BTI] gained 2.19% to R827.51 in brisk trade. Steinhoff [JSE:SHF] was only 0.06% higher at R62.59.
