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Johannesburg - Some semblance of calm returned to the JSE's financial sector on Friday, which showed much smaller losses than earlier in the week.
Banking shares, which lost more than 11% of their value over the past week after President Jacob Zuma sent the financial markets into turmoil with his controversial Cabinet reshuffle, were only 0.13% lower by mid-morning, after trading almost 0.70% up in earlier trade.
Investors were reassured by the South African Reserve Bank's statement that local banks are sufficiently funded to withstand Standard & Poor's decision to downgrade their foreign credit rating to junk status, in line with South Africa's sovereign rating.
Banking shares were also supported by a steadier rand, which was somewhat stronger on Friday at R13.74 to the dollar. Already on Thursday the currency traded in the narrowest band since the sacking of Pravin Gordhan as finance minister.
READ: To expect rand recovery would be 'foolish' - analyst
The rand stabilised despite a stronger dollar, which firmed as global investors fled to safe havens after the US launched a missile attack on the Syrian airbase from which a gas attack against civilians was launched earlier this week.
Interest rates on the bond market were also steadier, supporting bank shares with the yield on benchmark government bonds which expire in 2016 again falling to below 9%.
By mid-morning on Friday the Financial index on the JSE was only 0.27 % lower, with the Banking index 0.13% softer. Markets are however nervous to see if the anti-Zuma protests in cities throughout South Africa will turn violent.
The steadier rand was however bad news for rand hedge shares, which earn most of their income abroad, and receive more in rand if the currency is weak. That pulled some of the other indices lower.
The All-share index shed 0.75% to 52 522 points and the Top 40 index lost 0.89% to 45 768 points.
The big loser was the Resources index which was 2.13% down, as the stronger dollar is bad news for commodity prices. The Industrial index was 0.61% softer.
These indices include most of the big dual-listed shares, which represent more than half of the JSE’s market value. Stocks traded lower in line with softer European markets, which lost ground on fears the US attack on a Syrian base will increase tension between the US and Russia, which is supporting the Syrian government.
Among the banking shares FirstRand [JSE:FSR] traded 0.58% lower at R44.64 after an intraday high of R45.27, while Standard Bank [JSE:SBK] was 0.23% softer at R136.15 after reaching R138.75 in early trade. Nedbank [JSE:NED] lost 0.48% to 221.72, but Barclays Africa [JSE:BGA] was 1.23% stronger at R137.47.
Sanlam [JSE:SLM] gained 0.06% to R64.47 but the dual-listed Old Mutual [JSE:OLM] was 0.89% softer at R32.35.
Global commodity shares on the JSE were sharply lower. BHP Billiton [JSE:BIL] lost 2.97% to R214.19 and Anglo American [JSE:AGL] was 3.34% lower at R208.17.
The Gold index gained 3.6%, despite a slight stronger rand as international political uncertainty gave the gold price a boost. Gold traded 0.65% higher at $1 264 per ounce and South African gold shares are now almost 20% higher than a week ago. Gold Fields [JSE:GFI] was the biggest winner, adding 5.33% to R52.52.
Naspers [JSE:NPN], the biggest share on the JSE, traded 1.44% softer at R2 396.02.
