Industrials only black dot in sea of red on JSE

Cape Town – The JSE closed weaker for the second consecutive day, after a disappointing trading session. The outlook for the local market appeared bleak before a recovery in Industrials before the close, due to rand weakness.

The spot price of gold has continued its slide, dropping 0.55% to $1 230/oz after the US Federal Reserve left rates unchanged with the next hike expected in June. The rand weakened 1.02% to R13.57/$ to the greenback, assisting a few of the rand hedge stocks, with Richemont [JSE:CFR] closing 2.57% higher at R116.00 per share.

By 19:07 the local unit was trading at R13.60 against the greenback - down by 1.67% from its overnight close in New York and after hitting R13.63/$ earlier in the session.

This was after the rand hit a three-week low against the US dollar on Thursday morning after the hawkish Fed sent the greenback to a six-week high, pushing emerging market currencies lower.

READ: Rand breaches R13.60/$

Sibanye Gold [JSE:SGL] weakened 2.04% to R25.88 on the back of the weaker gold price, however the company remains in focus after shareholders voted in approval to acquire Stillwater Mining, a platinum producer in the USA. Investors should note that an announcement regarding the proposed rights offer of up to $1.3bn is imminent and the associated rights circular, which will outline the details of the offer to investors, is scheduled to be issued mid-May 2017.

Sibanye has significant institutional support for the deal and is likely to be able to raise the equity necessary to conclude the acquisition of Stillwater. The size of the equity raise has dampened the share price lately, however once completed Sibanye will rank among the largest producers of platinum group metals in the world. 

Glencore [JSE:GLN] softened 0.39% to R48.92 after releasing a first quarter 2017 production report, indicating that production experienced some weather related impacts. 

The JSE blue-chip Top 40 Index fell 0.36% to 46 747.06 points, followed by the All Share Index down 0.34% to 53 406.31.  Most sectors closed in the red with the Gold Index down 2.5%, Resources 1.23%, Financials 0.49% and Banks 1.76%.  The Industrial Index broke the negative trend and closed 0.07% firmer. 

Oil prices dropped 3.25% to $49.14 a barrel after data showed that inventories in the US declined less than expected following falling utilisation rates. While the crude inventories did not rise, the market had anticipated a larger cutback of availability. This data highlights that the global supply glut of crude remains intact.

In international market news, Puerto Rico is caught between a rock and a swathe of creditors. The island nation currently has over $70bn in debt and has sought bankruptcy relief under Promesa, a federal law enacted last summer by the United States which initiates a halt to any litigation by creditors.  

*This report is from the Trading Desk at EasyEquities, Fin24's latest content partner on equities and market moves.