Share

Firm rand on rate cut hold drags down JSE

Johannesburg - The rand traded firmer on Friday morning after the South African Reserve Bank decided to keep the interest rate stable, yet again pushing share prices on the JSE down.

Although news that the repo rate will remain unchanged was met with some disappointment, it boosted the rand and bonds. The local unit traded almost 1% firmer against the dollar at R13.20 to the dollar at mid-morning.

The currency has been under pressure for much of the week on expectations that US interest rates would rise and South African rates would drop, which meant the yield differential which attracts foreign investors to the local bond market would shrink.

It did not happen and this again sparked some buying, with the carry-trade on the rand once again looking attractive to investors looking for high yields.

A stronger rand is however bad news for the big dual-listed shares on the JSE, which earn most of their income abroad in foreign currencies and earn less in rand if the local currency is strong.

The resources sector was particularly hard hit, as mining commodities are priced in dollar, and the Resources index was already 1.34% softer at mid-morning. The Industrial index was 0.39% lower and the Financial index 0.32% down.

The result was that the All-share index lost 0.57% to 55 489 points by mid-morning, while the Top 40 index traded 0.59% to 49 225 points.

News of the unchanged interest rate met with some disappointment, as it was hoped a rate cut would promote desperately needed economic growth.

It was however a close decision. Governor Lesetja Kganyago said the six-member monetary policy committee was split 3-3 on whether to hold or cut, leading to the maintenance of the status quo.

The major conglomerates led the resources sector lower. Anglo American [JSE:AGL], which gained more than 3% on Thursday on news that Indian billionaire Anil Agarwal plans to purchase as much as $2bn worth of additional Anglo American shares, fell victim to profit-taking and traded 1.81% lower at R234.47.

BHP [JSE:BI:] was 2.35% softer at R235.66 and Glencore [JSE:GLN] lost 2.04% to R61.03. South32 [JSE:S32], which closed at a new record of R33.89 on Thursday, lost 0.97% to R33.56.

Two commodity shares which suffered big losses lately recovered somewhat. Impala [JSE:IMP], which shed 17.15% of its value over the previous seven days, regained 1.535% to trade at R33.10. Sibanye [JSE:SGL], which before Friday traded 20.31% lower over the previous seven days, strengthened 0.85% to R15.35.  

Naspers [JSE:NPN] again failed to breach the R3 000 mark and the share price fell back 0.57% to R2 968.40. Its Hong Kong subsidiary Tencent also traded lower, losing 0.29% to HK$346.20.

Richemont [JSE:CFR] was 0.29% higher at R119.19, but Sasol [JSE:SOL] lost 0.75% to R375.18. The share suffered big losses earlier in the week after the group wrote off almost R12bn to unwind an empowerment scheme and reported a 15% earnings drop.


We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.89
+0.2%
Rand - Pound
23.84
+0.3%
Rand - Euro
20.36
+0.4%
Rand - Aus dollar
12.30
+0.3%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders