JSE equities close lower in volatile trade

Equities on the JSE closed weaker after a volatile trading session which saw the ALSI Futures trading within a 402 point range, eventually closing in the red, down 0.18% for the day.

Investors were relatively tentative as they await the outcome of the UK general elections taking place today. Locally we had economic data releases for Manufacturing Production and Mining Production. Manufacturing Production year-on-year contracted further than expected, indicating a decline of -4.1% on the back of an estimate of -1.6%, however the month-on-month figure did indicate an increase of 2.3%, whereas the estimates were for a decrease of 0.2%.

Mining Production data year-on-year showed an increase of 1.7% which was less than the forecast of 6.9%. The month-on-month number did however show a decline of -1.6%, on the back of a forecast of it being unchanged. This data further reiterates that our economy is not performing as well as it should be. Weak global commodity prices have dug into the miners’ profits but the weaker Rand has helped mitigate bigger losses.

Our local market closed in the red again despite managing to turn positive for just a brief moment. The JSE Top-40 closed down 0.16%, with the JSE All-Share Index closing down 0.35%. The Resources index managed to close up 0.41%, and this is mainly attributable to BHP Billiton & Anglo American which closed up 2.34% & 2.23% respectively. The remaining major indices closed in negative territory, with Industrials & Financials in particular closing down 0.28% and 0.61% respectively.

The volatility in today’s trading session was most evident in currencies. The US Dollar Index, an indicator which measures the strength of the US Dollar against six major currencies, strengthened further in today’s trading session. It managed to break above the $97 price level, as investors piled into the currency reducing their exposure to the Euro and Pound ahead of the UK’s election outcome. As a result, the EURUSD & GBPUSD currency pairs weakened further in today’s trading session.

Gold continued to weaken in today’s trading session as the US Dollar extended gains against major currency pairs. The metal reached intra-day lows of $1271.43 per ounce & was trading at $1275.72 per ounce when the JSE closed. The metal was caught in volatile trade as markets looked for direction in a day filled with big events such as the ECB’s rate decision and James Comey’s testimony. Platinum also slid further today following the downtrend that commodities were in. The metal was trading at $936.91 per ounce when the JSE closed. Local miners on the JSE traded lower for the day as a result of the lower prices that we saw in metals today.

Brent Crude also continued with its slide following the big build in US Crude Oil Inventories that was recorded yesterday. The commodity reached an intra-day low of $47.56 per barrel, dragging down with it local oil and gas producer, Sasol, which closed the day 3.05% weaker. The outlook for Brent Crude still remains bearish in the short-term ahead of OPEC’s scheduled production cuts.