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JSE retreats ahead of mini budget

Oct 24 2017 19:17
Musa Makoni, EasyEquities

Johannesburg - Equities on the JSE closed softer on Tuesday, ahead of the Finance Minister Malusi Gigaba's Medium-term Budget Policy Statement set for Wednesday afternoon.

The local bourse failed to gain any significant momentum when it opened, and subsequently traded weaker for the better part of the day.

The majority of the blue chip index constituents traded in the red. Among the biggest losers were British American Tobacco [JSE:BTI] and Mediclinic [JSE:MEI] which shed 1.13% and 2.60% respectively. 

Mining stocks had a mixed day. Harmony Gold [JSE:HAR] and Glencore [JSE:GLN] inched up 1.23% and 1.73%, however AngloGold Ashanti [JSE:ANG] and Lonmin [JSE:LON] shed 1.55% and 1.96%. 

Banking stocks Standard Bank [JSE:SBK] and Barclays Africa [JSE:BGA] had another day of gains despite a somewhat weaker rand, closing up 0.96% and 0.46% respectively.

Diversified miner BHP Billiton [JSE:BIL], meanwhile, inched up 0.44%.

But the biggest gainers on Tuesday were WBHO [JSE:WBO] and Barloworld [JSE:BAW] which gained 2.10% and 5.22% respectively.

The blue chip JSE Top40 index closed the day down 0.14%, while the JSE All-Share index lost 0.16%.

It was a tough day for the local bourse as all the major indices closed in the red. The Industrials index lost 0.12%, while the Resources index lost 0.21%.

The Financials index shed 0.15% as the weaker Rand weighed down on it.

The rand, meanwhile, reversed overnight gains as the US dollar strengthened. The rand weakened to an intra-day low of R13.78/$ and when the JSE closed it was trading at R13.74/$.

Focus now shifts to Gigaba's mini budget speech. As most analysts are expecting tax increases in some form, economists will be keeping a close eye on how the rand reacts.

Precious metals 

Gold was bullish overnight but on Tuesday it lost most of its gains as the US dollar rebounded. Despite having peaked at $1 283.06 per ounce overnight, the precious metal lost ground to trade at $1 273.73/Oz when the JSE closed.

Platinum traded softer as it reached an intra-day low of $919.29/Oz, while palladium remained on its bullish trajectory to peak at an intra-day high of $969.00/Oz.

When the JSE closed palladium was recorded at $961.04/Oz, while platinum was trading at $920.49/Oz.

Brent Crude remained steady on the news that OPEC was working on an exit strategy, as well as discussing the possibility of extending production cuts until the end of next year.

Brent Crude was trading at $57.43 per barrel when the JSE closed.

After the US markets opened, meanwhile, the Dow Jones Industrials index reached fresh all-time highs. This was mainly driven by better than expected results for Caterpillar [NYSE:CAT], 3M [NYSE:MMM] and McDonalds [NYSE:MCD].

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