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Johannesburg - Disappointing results by Datatec, although not unexpected, grabbed most of the attention on the JSE on Tuesday, with most indices and share prices hardly moving as investors sat on the sidelines waiting for this week’s important central bank meetings in the United States and Japan.
The lack of activity was also due to the public holidays in the coming days, with volumes very thin as many market players are away on a mid-year break.
There was however brisk trade in Datatec shares with the price dropping 12.43% to R45.15 by mid-morning. This meant the stock has given all the gains of the past month as it lifted 13.7% over the past 30 days before Tuesday’s rout.
Datatec was one of the busiest shares in terms of volume and value, and more than 1.5 million shares were sold for more than R71m.
The reason for the sharp drop is a trading statement by the company that earnings before interest, tax, depreciation and amortisation for the financial year are expected to be about 22% below the previous comparable period's $206.4m.
The news was however not totally unexpected as the group already warned in January that its operating profit was impacted by the strength in the US dollar, its reporting currency, as well as ongoing restructuring.
There was otherwise very little activity, with the All-share index at mid-morning only 0.02% lower at 52 977 points and the Top 40 index only 0.07% higher at 46 613 points. The market seems to be in limbo at the moment as the All-share index has only moved 0.01% lower over the past seven days.
The other major indices also hardly moved, with the Financial index 0.9% down, the Industrial index 0.10% higher and the Resources index losing only 0.20%. The Gold index was however 1.9% lower after shedding 2.5% over the previous seven days.
The rand was also steady at R14.48 to the dollar in very thin trade.
The lack of excitement on the JSE is in line with global markets, with Asian markets also moderately lower following in Wall Street’s footsteps the previous evening. European markets were moderately higher.
The uncertainty about the outcome of the Federal Reserve’s meeting this week increased with a surprise drop in new US home sales data for March, which supported a view of slow economic growth which may keep the Fed from raising interest rates.
Some analysts also expect US first-quarter growth, to be announced on Thursday, to show very sluggish growth.
Yet Fed officials have repeatedly said a hike in June is on the cards and that market expectations about future interest rate hikes are too low.
An increase in US interest rates will support the dollar to the detriment of the rand and could lead to an outflow of investments from emerging markets like South Africa to the US, where the risks are perceived to be lower.
Share prices on the JSE moved very little and Naspers [JSE:NPN] was only 0.41% higher at R2 019.90, SABMiller [JSE:SAB][ lost 0.42% to R884.06 and British American Tobacco [JSE:BTI] 0.17% to R876.50.
In the resources sector, BHP Billiton ]JSE:BIL] traded 1.14% higher at R197.33 but Anglo American [JSE:AGL] lost 0.64% to R142.34 and Glencore [JSE:GLN] was 0.64% softer at R32.38.
Pick n Pay [JSE:PIK] announced good results on Tuesday but at mid-morning the share price was unchanged at R69.49. The group increased its in full-year profit by 26% after opening 175 new stores.
The company also said it agreed to partner with Lagos-based AG Leventis & Co to enter the Nigerian market.
Barclays Africa [JSE:BGA] traded almost 1% higher on the reports that the US private equity group Carlyle and Atlas Merchant Capital, the investment vehicle established by former Barclays CEO Bob Diamond, are teaming up to make a joint offer for the 62.3% stake in the group currently owned by Barclays Plc.
Barclays Plc said last month it would sell down its 62.3% stake in Barclays Africa, which by mid-morning traded 0.96% higher at R145.25.
