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Johannesburg - The JSE is lacking direction as share prices again hardly moved on Friday morning, amid indications that world markets are losing momentum as the past-Brexit rally has run its course.
Some weak corporate results halted Wall Street's record run overnight, and Asian and European markets followed the trend on Friday morning.
The JSE opened more than 0.5% lower on Friday, but moved sideways for the rest of the morning and recovered some of the earlier losses by mid-morning.
At that stage the All-share index was 0.31% lower at 52 810 points while the Top 40 index traded 0.34% softer at 46 115 points. The Financial index was only 0.02% softer but the Industrial index lost 0.32%.
The recovery in resources shares on Thursday did not last long, as commodity prices lost their momentum of the previous day as the prices of oil, copper and precious metals retreated. By mid-morning resources shares were 0.84% lower, but the Gold index gained 1.30% despite a slightly lower gold price.
It seems markets worldwide are desperately in need of a correction; this comes after the recent strong run in anticipation of possible monetary stimulus programmes from the world’s major central banks to counter any Brexit fall-out.
The markets are still waiting for those central bank interventions, and disappointing company results have raised concerns about share valuations.
As widely anticipated, the European Central Bank did not move on monetary policy on Thursday, but analysts said the bank kept the door open to more policy stimulus, citing "great" uncertainty and risks to the region's economic outlook.
The governor of the Bank of Japan, Haruhiko Kuroda, ruled out the idea of the central bank directly underwriting the county’s budget deficit to combat deflation.
Markets are also awaiting the outcome of this weekend’s meeting by the finance ministers of the G20 in China.
The negative sentiment in the resources sector was sparked by declines in the oil price, which is heading for a 3% drop for the week. Brent crude traded at $46.35 after data pointed to record US stockpiles of petrol and other oil products at a time when Iraqi crude exports are on the rise, heightening supply glut concerns.
Sasol [JSE:SOL], the company on the JSE whose profits are the closest linked to the oil price, traded 0.48% lower at R399.04. BHP Billiton []JSE:BIL], which is also a producer of oil and gas, traded 1.91% softer at R174.45.
In the resources sector the Anglo American [JSE:AGL] group, whose production figures for the second quarter fell below market expectations, is still attracting a great deal of attention. Platinum production from the group’s Rustenburg operations dropped 8%, Kumba’s [JSE:KIO] iron sales were 26% lower, copper production fell 8% and diamond production lost 19% compared to the same quarter year ago.
Anglo American traded 1.21% lower at R147.49 while Kumba lost 1.12% to R123.84. Anglo American Platinum [JSE:AMS] was only 0.34% softer at R388.78 and was the standout performer in the Anglo group, with total platinum production 1% higher to 586 000 ounces versus the same quarter last year.
African Rainbow Mineral’s [JSE:ARI] share price bucked the trend in the resources sector by gaining 2.67% to R98.36.
SABMiller [JSE:SAB] was 0.28% lower at R828.51 after the company said it would wait until Chinese regulators approve Anheuser-Busch InBev’s (AB InBev's) takeover of the group before reconsidering the terms of the deal.
At SABMiller's annual general meeting chairperson Jan du Plessis said investors
have requested the board to reconsider AB InBev’s offer, as the pound’s plunge has
made the $102bn acquisition much less attractive for shareholders. AB
InBev was 0.50% lower at R1 771.06.
