JSE down amid risk aversion

Johannesburg - The JSE ended in the red on Friday amid weaker commodity prices and a frail Dow with profit taking and risk aversion back in the market after a few days of good gains.

At 17:00 the JSE all share index had weakened 0.48%, with resources down 0.40%. Platinum miners collected 0.36% and gold producers added 1.50%.

Banks were down 1.07%, financials gave up 0.66% and industrials were off 0.48%.

The rand was bid at 7.55 to the dollar, from 7.52 when the JSE closed on Thursday. Gold was quoted at $1 140.75 a troy ounce from $1 136.35 at the JSE's last close, and platinum was at $1 433/oz, from $1 449/oz at its previous close.

"We ended down today. The US opened lower and the commodity prices are down," a trader said.

"Risk aversion is back in the market. The strong dollar is putting the commodity prices under pressure.

"The gold sector is the only sector that is up, maybe it's people seeking safety," he said.

"It was expected though, we just didn't know when it would happen.

"We are just seeing some profit taking after a good few days of good gains," he concluded.

Dow Jones Newswire reported that US stocks opened slightly lower on Friday, as a bigger-than-expected drop in Dell's latest quarterly earnings weighed on the technology sector, prompting investors to continue moving away from riskier investments and into the safety of the dollar.

The Djia was recently down 5 points at 10329. Alcoa was the measure's weakest component, off 1.4%. Caterpillar also fell more than 1%.

Technology components Cisco and Intel were down about 0.7% each, reflecting disappointment across the sector after Dell reported a 54% drop in its fiscal third-quarter profit, missing analysts' estimates on a double- digit drop in revenue. Shares of Dell, which is not a Dow component, tumbled 8% recently.

The technology-heavy Nasdaq Composite fell 0.5%. The Standard & Poor's 500 index declined 0.4%, led by its technology sector.

Friday's small declines cap a week that began on a high note, with the Dow industrials reaching new highs for the year earlier in the week, but has since gone downhill as mixed economic reports and weak forecasts from a number of retailers prompted a move away from riskier equities and into areas of perceived safety.

"To me the market's overdone right now and with Dell's earnings being a disappointment and the dollar up, I can understand why the market's lower," said Terry Morris, co-portfolio manager at National Penn Investors Trust.

Still, Morris said he was surprised the market has been so resilient, as Friday's early declines were minimal.

At the time the JSE closed, the Djia was flat, down 0.13%.

- I-Net Bridge