Fresher Friday after rough JSE week

SOUTH African markets perked up a little on Friday after a fairly volatile week marked by sharp falls in commodity prices.

The broad retreat in commodities had a notable effect on resource shares on the JSE, as well as the rand, which slipped as much as 2.5% to R13.71/$ before coming back a little on Friday.

“This was the week we were again reminded that the direction of our local markets often has less to do with our local problems and more to do with global outlook, especially when global outlook impacts commodities,” said Caroline Cremen, portfolio manager at Adviceworx, a member of Old Mutual Group.

The price of Brent crude dipped below $50 a barrel for the first time since November, when big producers resolved to cut output to support the price.

The prices of platinum, gold, copper and iron ore also came down this week, an outcome that played out badly for stocks such as Anglo American, which is now 24% below its February high of R232.97.

“The broad fall in commodity prices this week has weighed on EM [emerging-markets] commodity currencies, but it doesn’t do much to alter the economic outlook either for EM commodity producers or EM commodity consumers,” said Neil Shearing, chief emergingmarkets economist at Capital Economics.

Retailers also took a knock, as did rand-sensitive shares such as Imperial and Barloworld. This week’s release of poor new-vehicle sales data also weighed on the shares.

The All Share index settled 0.32% higher at 53 579 points on the day on Friday but still ended the week on a weaker note.

Meanwhile, the closely watched US nonfarm payrolls data generated a fairly muted market reaction. The US economy created 211 000 jobs last month, which comfortably beat market expectations, but wage growth disappointed.

The US dollar index, which measures the American currency against a basket of major currencies, was slightly lower on Friday.