Sales data depress retail stocks

THE JSE closed weaker on Wednesday as disappointing retail sales data weighed on local retail stocks.

Global trade was cautious as the blackout period for officials of the US Federal Reserve commenced. This meant no comment on interest rates was possible until after next week’s scheduled meeting of the federal open market committee.

A lack of economic data on the day provided little guidance for global markets, with the lower Brent crude price denting sentiment. Brent crude had shed 2.12% to $46.14 a barrel by the JSE’s close, on renewed indications of oversupply constraints in the sector.

Local retail sales grew 0.8% in July from a year earlier, after being revised downwards to 1.4% (1.7%) in June. Growth of 2% had been expected.

The average for real retail sales growth is 5% a year, which will make it difficult for the Reserve Bank to raise rates in 2016.

Among individual shares, retailer Truworths (TRU) shed 4.07% to R71.95, Woolworths (WHL) dropped 4.2% to R80 and Mr Price (MRP) plummeted 5.64% to R150.32.

Sasol (SOL) firmed for the third consecutive day, up 2.74% to R386.50, despite weaker oil prices, as the market warmed to its annual results.

Richemont (CFR) was 4.47% lower at R84.69, after announcing total sales were 13% lower for the first five months of the current financial year.

Kumba Iron Ore (KIO) was 3.91% off at R120.35 after announcing earlier that it was facing an additional payment of R1bn for the 2011 tax year.

Anglo American Platinum (AMS) closed 1.74% lower at R395.50 after it reported furnace trouble on Tuesday.

Standard Bank (SBK) fared worst in its sector, down 3.31% to R136.42.

In property, MAS (MSP) firmed 2.45% to R18.85.

The rand was stronger in late trade despite the disappointing retail data. At 6.17pm, the exchange rate was R14.2961/$ from Tuesday’s R14.3951/$. It was R16.1088 to the euro from R16.1491‚ and R18.8783 to the pound from R18.9904.

The euro was at $1.1267 from $1.1219 previously.

Despite being confined to a narrow trading range throughout the day, the local bond market strengthened slightly in the early evening. At 6.21pm, the benchmark R186 was bid at 8.670% and offered at 8.660% from Tuesday’s 8.705%. The R207 was bid at 7.910% and offered at 7.895% from 7.950%.

South African futures tracked the JSE weaker despite a stronger Dow.

At 6.25pm the Dow Jones industrial average was up 0.31% to 18,122.67.

At the same time, the local neardated top 40 Alsi futures index was 0.28% lower at 46,100 points, with 34,774 contracts traded from Tuesday’s 125,105.