Market steadies as Abil keeps plunging

SOUTH African share prices ended largely flat on Friday, recovering earlier losses after betterthan-expected US economic data.

Cellular network operator MTN Group led the gainers.

US second-quarter nonfarm productivity rebounded more strongly than expected, putting a lid on wage pressures and giving the Fed room to keep interest rates low for the time being.

The benchmark Top 40 index added 0.06% to 45 561 points while the wider All Share index eased 0.01% as African Bank continued its spectacular nosedive.

MTN Group extended gains from the previous day when it posted a 9% rise in first-half profit. The share added 3.9% to R232.35.

African Bank Investments Limited (Abil) continued its plunge triggered on Wednesday when the microlender warned it needed to raise R8.5-billion after flagging an annual loss and the departure of its CEO. Abil fell 38% to 31c.

Bond yields fell in key markets as investors shifted to the safety of government debt, spurred by US president Barack Obama’s decision to authorise air strikes in Iraq, though most equity markets recovered from overnight losses.

The 10-year US Treasury hit its lowest yield since June last year, and Germany’s 10-year Bund fell to another record low, closing in on 1%. Oil rose on concern about the threat to oil supplies in Iraq.

Investors expect volatility to continue to rise with uncertainty about conflict in Ukraine and worsening conditions in Iraq expected to weigh heavily at the weekend.

Obama said he had authorised “targeted” strikes to protect the besieged Yazidi minority and US personnel in Iraq. Hours after his statements, US aircraft bombed Islamic State artillery attacking Kurdish forces near Arbil, Iraq.

Global equity markets rebounded from their worst losses overnight, with the MSCI All World index down just 0.2%. Asian markets bore the brunt of the selling, with Tokyo’s Nikkei 225 losing 3%.

A broad index of European stocks was down 0.7%. Germany’s DAX index lost 0.4%, though that was better than earlier levels.

Wall Street managed to post modest gains. The Standard & Poor’s 500 index gained 0.2% to 1 913.95 in early trade.

US crude was up 22c to $97.56 a barrel, while Brent was down 9c at $105.35. —