JSE lower as banks retreat on bad news

THE JSE closed weaker as retailers and banks retreated sharply yesterday after the news that the economy had technically entered a recession.

Mining stocks‚ however‚ benefited from a softer rand and higher commodity prices.

Analysts said the market and the rand’s reaction was relatively muted as most of the bad news – showing the economy had contracted 0.7% – was already priced in.

“The reality is that SA’s growth has been slipping sharply since 2011‚” Citadel financial partner Maarten Ackerman said. For the past few years‚ population growth has outstripped economic growth and South Africa had become poorer, despite positive economic growth, he said.

General retailers‚ as well as banks‚ financial stocks and food and drug retailers on the JSE ended sharply lower on foreign selling‚ but gold shares rocketed on a firmer gold price and the softer rand.

Resources and platinum shares were also higher‚ but rand hedges ended the day mixed.

Industrials were weaker in risk-off trade on growing geopolitical tensions centred on the Middle East, with Brent crude slipping further below $50 a barrel despite concern about possible supply disruptions.

The JSE all-share closed 1.17% lower at 52 251.9 points and the bluechip Top 40 1.19%. Banks shed 3.28%‚ financial stocks 3.25%‚ general retailers 2.75% and food and drug retailers 2%. Industrials were 1.58% lower and property shed 0.93%.

The gold index rose 6.93% and resources 1.29%. Platinums shed 1.2%.

Among banks‚ Standard Bank shed 4.29% to R143.57 and Barclays Africa 3.55% to R146.60.

Woolworths lost 3.81% and Mr Price shed 3.05%.