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Cape Town – The JSE cooled on Thursday in line with global markets, with the negative direction in line with the strengthening rand.
The rand firmed to R14.04/$ after closing near R14.14/$ on Wednesday. The strengthening rand typically dictates the direction of the JSE, putting pressure on rand hedge stocks which make up most of the market weight.
The rand had gained 0.20% against the dollar and more than 1.2% against the pound on Thursday afternoon following the decision by the Bank of England to hike interest rates by 25 basis points to 0.50%, the first rate hike since 2007.
READ: Bank of England raises interest rates for first time in decade
Commodity prices were generally lower, pushing the Resources index down 0.52% and the Gold index down 0.72%
The JSE All-Share Index closed the day 0.31% softer, matched by the blue-chip JSE Top-40 Index which closed 0.40% down. Financials could take advantage of the stronger rand and the index gained 0.39%
Firstrand [JSE:FSR] led the banks, and climbed 1.65% to R52.50 per share.
Kumba Iron Ore [JSE:KIO] bucked the weaker trend in the resources sector, gaining 4.05% to R287.72, despite only steady iron-ore prices. AngloGold [JSE:ANG] fell 2.64% to R121.06 on the weaker rand-gold price.
Platinum producers emerged as the frontrunners in the local market, with Lonmin [JSE:LON] gaining 5.07% to end the day at R19.48 a share, Implats [JSE:IMP] rising 3.21% to R39.22, and Anglo American Platinum [JSE:AMS] gaining 1.30% to trade at R265.09.
The platinum index gained 1.61% overall as miners react to stronger platinum prices and the weaker rand.
Truworths [JSE:TRU] stumbled 3.02% to R75.29 after announcing earlier in the day that its retail sales had declined 3% to R5.5bn during the first 17 weeks of its financial year. The retailer has struggled to increase earnings, and the share price has been range bound as a result.
New vehicle sales
South African new vehicle sales increased to 51 037 units in October, the highest volume since November 2015. Passenger vehicles sales were boosted by rental industry purchases, while commercial sales moderated after four months of improvement. Vehicle sales figures continue to rebound off a low base.
However, the numbers still do not indicate a strong upturn and are unlikely to have policy consequences. In the short term renewed pressure on the rand, higher oil prices, an uncertain political climate and a squeezed consumer have reduced the scope for further easing.
In the US President Trump is set to pick Fed Governor Jerome Powell to be the next Fed chair, succeeding Janet Yellen, whose four-year term expires in early February, WSJ reports.
He is seen as the "safe choice" because he's not expected to veer drastically from current Fed policy. That would mean gradually raising short-term interest rates in quarter-percentage-point steps through 2020, while slowly shrinking the Fed's $4.2trn balance sheet.
US October employment data is due to be released on Friday afternoon. Traders will be eager to hear the US Non-Farm Payroll numbers released with most surveyed economists expecting a large increase in jobs created in October, as the US market nears full employment.
Cryptocurrency Bitcoin, meanwhile, climbed past $7 000 overnight for the first time ever, giving investors serious thought if it will hit $10 000 by year's end. It has had a staggering $3.5bn trade volume over the past 24 hours, and got new impetus this week after the CME Group said it planned to introduce bitcoin futures.
Labour force data
South African labour force data showed that the SA unemployment rate remained unchanged at 27.7% in the third quarter as the labour force increased, while the labour absorption rate remained steady.
The formal sector employment increased by 1.7% over the quarter, manly driven by increased employment in the financial as well as community and social services industries, while the informal sector recorded job losses. The statistics provide further evidence that general economic conditions remain subdued and the economy is struggling to create jobs
Brent Crude continued its climb, trading at $61.01/bbl at the close of the local session. Sentiment remains largely bullish in the commodity as geopolitical uncertainties stem from the conflict between the Kurds and Iraqis, North Korea's nuclear ambitions, and the potential for President Trump to decertify the Iran nuclear deal.
Another positive factor is the upcoming OPEC meeting at the end of November where many expect the agreement limiting crude oil output to be extended beyond March 2018.
China's official manufacturing PMI missed expectations in October, coming in at 51.6, with both production and demand falling during a week-long national holiday.
Activities in the energy and manufacturing industries also slowed due to the country's crackdown on pollution in some regions. The official services PMI meanwhile fell to 54.3 from 55.4 in September, according to the National Bureau of Statistics.
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