Although still in positive territory, the JSE was well off its highs in noon trade on Wednesday as the chill wind of Thursday’s expected rate hike swept through the market. Gold stocks continued to shine, however, as the metal reached the $650 level for the first time in over two weeks.
By 11:55, the all share index added 0,21%. Resources rose 0,53%, the gold mining index jumped 2,91% and the platinum mining index picked up 1,19%. The all share industrial index was flattish (+0,05%). Financials fell 0,37% and the banks index surrendered 1,19%.
The rand was bid at 6,91 per dollar from 6,97 when the JSE closed on Tuesday, while gold was quoted at $650 a troy ounce from $632,75/oz at the JSE’s last close.
“The market opened up quite strongly on the back of futures and then drifted all morning with everything else coming under pressure,” a dealer said.
He added that on Tuesday there had been a buying programme at the close which perked the market up a couple of points from where it should have closed and prices were returning to more normal levels.
“There is uncertainty as to whether tomorrow’s [Thursday’s] rate hike will be higher than expected or in line. Even if it is in line, if Mboweni’s comment is perceived to be negative, there may as well be 100 points now because it will be seen as a sign of things to come and the market will tomorrow price in another 50 basis points in two months time. But if he hikes rates by a full 100 points now, it might seem to be irrational,” the dealer commented.
On top of this, Tuesday had been quite a significant down day on the Dow. On Asian markets, there had been quite a big buying programme which saw them rally into the close, but they still hadn’t ended significantly higher, he said.
On the upside, the gold price was looking perky and this had lifted gold stocks.
Tito Mboweni is widely expected to announce a 50 basis point increase in the repo rate on Thursday afternoon following the Monetary Policy Committee’s two-day meeting.
On the JSE’s upside, Gold Fields leaped 3,3% or R4,75 to R148,80, AngloGold Ashanti advanced 3,15% or R10,50 to R343,50 and Harmony was 1,55% or R1,50 higher at R98.
Junior miner Western Areas surged 4,79% or 45 cents to R43. AngloPlat strengthened 2,77% or R19,99 to R741.
Global resources group BHP Billiton inched 30 cents higher to R128,80.
Swiss-listed luxury goods group Richemont rose 1,74% or 52 cents to R30,42.
Transport and logistics group Imperial bounced 91 cents to R127,66.
Short-term insurer Mutual & Federal rocketed 11,36% or R3,75 to R36,75, while rival Santam rallied 2,19% or R1,50 to R70.
It was revealed before the opening that Mutual & Federal saw diluted headline earnings per share for the six months ended June decline from 236 cents to 203 cents.
The group’s underwriting surplus for the half-year was almost halved from R271-million to R140-million.
The group said on Wednesday that trading conditions within the short-term insurance industry deteriorated during the period following a severe escalation in average claims costs and an increase in the incidence of commercial and industrial fires.
However, while the dividend for the interim period remained unchanged at 40 cents per share, the good news for shareholders was that the group has declared
a special dividend of R8 per share.
London-listed real estate group Liberty International firmed 1,24% or R1,81 to R147,91.
On the markets downside, Anglo American dipped 73 cents to R286,99.
Resource group Kumba lost 1,21% or R1,50 to R122,50, while Mittal Steel tumbled 2,11% or R1,50 to R69,50.
Kumba on Wednesday reported a 61% leap in headline earnings per share to 508 cents for the six months ended June.
This was achieved on the back of 32% growth in revenue to R6,9-billion from a restated R5,247-billion for the previous comparable half-year.
The group declared an interim dividend of 180 cents per share compared with 160 cents per share last time around. A strike at Kumba entered its fourth day on Wednesday. Mittal earlier reported a sharp decline in basic headline earnings per share to 429 cents for the six months ended June from 723 cents a year ago. On a diluted basis, HEPS fell to 428 cents from a previous 721 cents.
The company said the main reasons for the substantial decline from last year were lower sales prices, an increase in costs, lower export volumes, lower equity accounted earnings and voluntary retrenchment packages. This was partially offset by higher local volumes and foreign exchange gains.
An interim dividend of 143 cents, covered approximately three times by headline earnings, was declared compared with 240 cents a year ago.
London-listed brewer SABMiller eased 41 cents to R135,99.
Food group Tiger Brands fell 1,02% or R1,51 to R146,50.
Retailer were taking strain, with JD Group dropping 1,79% or R1,10 to R60,40.
Truworths tumbled 2,12% or 46 cents to R21,24.
Shoprite slumped 2,48% or 59 cents to R23,21.
Standard Bank slipped 1,14% or 86 cents to R74,55. FirstRand fell 1,26% or 21 cents to R16,40, Nedbank weakened 1,3% or R1,40 to R106,61 and Absa was 1,69% or R1,70 in the red at R99. – I-Net Bridge