Nasty, brutish and short week on JSE

THE JSE All Share index ended a shortened week on a negative note on Thursday, closing 1.28% weaker at 50 831.90 points as miners retreated on the new mining charter and Naspers failed to benefit from a trading update.

The index was 2.65% lower for the week, its worst weekly performance so far this year, but is 0.35% up for the year.

“The All Share has been knocked back to its sideways trend after showing promising returns in May,” said Stanlib retail investment director Paul Hansen.

The stipulation in the charter that companies pay 1% of their annual turnover to their 30% BEE structure before any distribution to all shareholders caused locally listed global miners to retreat.

Anglo American was 4.89% lower at R163.31, and BHP was 0.98% weaker at R189.16.

Naspers closed 2.20% lower at R2 497.87 and lost a weekly 6.9%. Naspers expects annual headline earnings per share to end-March to rise between 4% and 10%.

Lower commodity prices added to the woes in the sector, with the platinum price retreating nearly 1.56% to $921.60/oz. Gold lost 0.5% to $1 255/oz.

The recession and the Moody’s downgrade kept the JSE on the back foot for most of the week, but on Thursday market sentiment was affected by global events.

The US Federal Reserve’s decision to hike rates, and a more hawkish statement, caused riskoff trade towards emerging markets, despite a weaker rand, which usually benefits miners and rand hedges.

Although the Bank of England held rates unchanged, three members of the monetary policy committee voted for a rate hike on a deteriorating inflationary outlook.

The FTSE 100 was weaker in response, and local shares with a bias towards the UK market also lost ground.

The rand lost more than 20c against the dollar as the latter firmed on the Fed’s hawkish stance. The Fed envisages another US rate hike this year, and up to three in 2018 as the neutral rate of 3% increasingly comes into play.