Market firmer as food and drug stocks rally Retail merger deal off

The JSE closed firmer yesterday as food and drug retailers rallied after Steinhoff and Shoprite called off their planned merger.

Banks‚ under pressure most of the day‚ pared losses later in the afternoon after Citibank’s South African operation announced it would pay an administrative penalty of R69.5-million as part of the forex trading cartel fingered by the Competition Commission.

Gold shares weakened despite the rand firming against the dollar‚ which was slightly down against the euro.

Shoprite’s share price rocketed and Steinhoff’s leapt as the market reacted positively to Steinhoff’s announcement in the morning.

Global trading was subdued due to President’s Day in the US‚ with European bourses mixed.

The FTSE and Paris CAC 40 were both weaker at the JSE’s close‚ with the FTSE 100 down 0.18%‚ while the German Dax rose 0.61%.

Market focus remains on expectations of US interest-rate rises this year.

“Despite the upside surprise to US CPI inflation‚ we read Fed commentary as pointing to a low probability of a rate hike in March‚ while a few rate hikes this year remained likely‚” Barclays Research analysts said.

The all-share closed 0.64% higher at 52 558.60 points and the blue-chip top 40 rose 0.96%.

Food and drug retailers added 3.01%‚ industrials 1.18% and resources 0.56%.

The gold index was down 3.85% and platinums 1.19%. Banks lost 0.59% and financials 0.24%.

Commodity prices had perked up by the close.

PPS Investment’s analyst David Crosoer said equity markets were likely to hold surprises for investors this year “with an unpredictable US president and a complicated UK political disengagement from the EU”.

He said emerging markets would also face challenges‚ imposed by continued US interest rate tightening and potentially disorderly Chinese deleveraging from unsustainably high debt levels.

“Global equity markets generally remain relatively expensive‚” Crosoer said.

Shoprite gained 8.64% to R188 and Steinhoff firmed 4.96% to R70.11.

Anglo American gained 1.69% higher to R220.87‚ and Sasol 1.60% to R374.50.

Harmony Gold lost 4.26% to R35.50 and Sibanye 2.33% to R28.45. Anglo American Platinum was 0.95% lower at R324.47.

Standard Bank shed 0.92% to R145‚ but Barclays Africa rose 0.27% to R161.33.

Financial services group Discovery dropped 2.31% to R120.50 and MMI Holdings 2.22% to R25.59.