JSE ends lower on disappointing Richemont results

May 12 2017 18:27
Musa Makoni, Trading desk at EasyEquities

Cape Town - The JSE traded lower on Friday mainly led by Richemont, which released a rather disappointing set of full-year results.

Richemont reported decreases in sales and profit for the full-year and the stock closed the day 5.09% lower. Retailers such as Mr Price, Truworths & Woolworths remained under pressure mainly due to the downgrade of the stocks by analysts on Thursday, which saw them close lower at the close of the JSE. Gold miners were higher on Friday on the back of gains in the gold price after a miss in US retail sales numbers.

The JSE All Share Index eventually closed down 0.23%, with the blue-chip Top 40 stocks down 0.12%. Industrials closed 0.22% lower and resources were 0.18% lower. Financials recorded modest gains and coupled with the gold index, they closed up 0.34% & 2.10% respectively.

International markets

Germany released CPI for the year & GDP data for the quarter which came in line with market expectations at 0.0% and 0.6% respectively. The DAX reacted positively to this news, with the index closing up 0.47%.

Inflation was in focus on Friday as the USA released CPI data which came out in line with market expectations of 0.2%, however the retail sales figure came in slightly below expectations at 0.4%, on the back of a forecast of 0.6%. The University of Michigan Consumer Sentiment came in slightly better than expected at 97.7, on the back of a forecast of 97.0

Commodities were firmer as Brent Crude continued to rally on the back of the big draw in US crude inventories on Wednesday and a relatively weaker US Dollar. On Friday, Brent Crude managed to reach intra-day highs of $51.09/bbl.

The higher oil prices will bring a slight sigh of relief to OPEC, who have gone out of their way to try and revive oil prices through production cuts. It is becoming clear that OPEC need to cut production even more if they want to stifle the competitiveness of shale producers. US production has increased since OPEC began production cuts and according to Bloomberg, by the time of OPEC’s next meeting, US production will have reached 9.5 million barrels per day.

Gold firmed after the release of USA retail sales data which missed estimates of 0.6% and came in at 0.4%. This data led the US Dollar index lower and gold reacted positively reaching an intra-day high of $1231/ounce.

Towards the close of the JSE, the US Dollar index recovered slightly and subsequently gold shed some gains to trade at $1229.8 at the close of the JSE.

Investors now shift their focus to French President Emmanuel Macron’s scheduled first meeting with the German Chancellor on Monday. The main agenda of the meeting is expected to be strengthening the ties in the Eurozone and improving the labour market.

*This report is from the Trading Desk at EasyEquities, Fin24's latest content partner on equities and market moves. Read Fin24's top stories trending on Twitter:

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

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