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Rand, mining regulation weigh on JSE

May 31 2017 20:28
Martin Harris, Easy Equities

Cape Town - The rand traded at R13.17 against the greenback at the close of the JSE as heightened political risk weighed on the local unit, despite the dollar retreating against major currencies.   

Locally the market is awaiting announcements from credit rating agencies S&P and Moody’s before structuring forward guidance.

Political uncertainty has weighed on the mining industry, putting the resources sector under pressure. This follows the drafting of a revised mining charter, while the mining industry has complained that it has not been consulted about the adjustments. 

READ: Miners frozen out as SA readies new empowerment rules

The mining industry has struggled to grow investment over the last few years and are set to face additional levies and taxes. 

The blue-chip JSE Top40 index slipped 1.14% followed by the All-share index which closed 1.10% lower, as most sectors closed in the red. The fall was led by Gold miners which dropped 1.68%, followed by Financials (-1.58%), Industrials (-0.99%) and Resources (-0.85%). 

The banking sector had a bad day out, with the Banks index dropping 3.12%. 

Barclays Africa [JSE:BGA] took a 4.76% tumble, claiming the biggest loser on the Top 40, followed by Standard Bank [JSE:SBK] slipping 3.63%, FirstRand [JSE:FSR] 2.89%, and Nedbank [JSE:NED] 1.36%.

Taste [JSE:TAS] closed 5.24% lower at R1.72 per share. The company, famous for luxury watch retailers and for bringing Starbucks to South Africa, is currently undergoing a capital raise and are looking to offload their primary jewellery businesses, Arthur Kaplan and NWJ. 

The company is looking to streamline operations and focus capital on the new trajectory, into food and coffee brands, and expand their small footprint of Starbucks and Domino’s Pizza in South Africa. 

The share price has been under stress and it is expected that it will take time for the heavy capital investment, in Starbucks particularly, to start making returns. 

Oil has been trading in a narrow band around $50 barring any geopolitical drama. Oil traders are awaiting the latest supply data.

The EIA is scheduled to release monthly crude oil and natural gas production numbers at mid-day in the United States, to be followed shortly by petroleum supply data for May.

China posted manufacturing and services numbers that showed steady expansion. Investment in construction and infrastructure played a part in the solid numbers.

The country's manufacturing PMI was unchanged from 51.2, marking its 10th straight month of expansion. Meanwhile, non-manufacturing PMI rose to 54.5 from the prior month's 54.0.

* This report is from the Trading Desk at EasyEquities, Fin24's latest content partner on equities and market moves.

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