JSE’s bad week wipes out 2015 gains

THE JSE took a serious knock this week, with financial and industrial shares joining the continuing rout in the resources market.

The JSE All Share index suffered its biggest weekly percentage loss in about four years, wiping out this year’s gains, in line with a broadly weaker trend on global markets.

It ended 4.56% weaker at 49 284.49 points — its weakest level since September. Financial and industrial stocks led the downside, with some analysts attributing the moves to jitters over a possible downgrade.

“Foreigners continue to light- en their portfolios of domestic securities, anticipating not only the risk aversion towards emerging markets and the flight of this capital into safe haven markets like the US, but also the possibility of a downgrade in the South African credit,” Lefika Securities economist Colen Garrow said.

The closely watched US nonfarm payrolls report on Friday was more or less in line with market expectations, bolstering the case for an interest rate hike when the US Federal Reserve meets in less than two weeks.

The US economy added 211 000 jobs in November, with the unemployment rate remaining steady at 5%.

While US equities initially responded favourably to the data, the dollar kept its weaker bias, suggesting again that the expected US rate hike may have been priced in.

The weaker dollar provided a much-needed boost to commodity prices in late trade, which will likely translate into higher commodity shares early this week.

The resources index, which has lost nearly 40% of its value this year, is being reshuffled. African Rainbow Minerals, Sibanye Gold and Northam Platinum will drop off the index when the changes become effective on December 21.