Rand strength sets tone for JSE slide
The Rand strengthened in today’s session causing Rand hedge stocks to trade under pressure, which dragged the overall index lower.
The Rand managed to strengthen to highs of R12.94 against the US Dollar after trading on the JSE began today. Investors were eagerly awaiting the verdict of the Constitutional Court on the application made by the United Democratic Party (UDM), for the parliament to have a secret vote for a motion of no confidence in President Zuma. The Constitutional Court ruled that the speaker of parliament had the right to order a secret vote as it was within her rights, therefore this means we should expect to see more pressure from opposition parties to get the vote done. The Rand did eventually creep back up above R13/$ & was trading just above this level. At the JSE close it was trading at R13.01 against the greenback.
Local equities were under pressure today and even more so towards the close. The blue chip Top-40 index closed 0.59% lower, with the broader JSE All-Share index losing 0.64%. The Financials index did not get any reprieve from the relatively stronger Rand, as most of financial stocks were trading in red territory for most of the day. That index was down 0.80% for the day. The Resources index was down 0.51% whilst the Industrials closed 0.65% weaker.
Gold was mostly positive on the day as the US Dollar continued to trade relatively weaker against a basket of major currencies. Investors bought the commodity on safe haven buying which saw it reaching intra-day highs of $1254.65 per ounce before settling at $1250.50 when the JSE closed. Top-40 index miners AngloGold & Goldfields were the biggest gainers on the day closing up 4.45% & 2.76% respectively.
Palladium and platinum were also positive on the day as demand for commodities was relatively positive globally. Platinum miners on the JSE traded in positive territory as a result of this upside in platinum and palladium, which saw stocks such as Impala Platinum and Anglo American Platinum closing up 1.36% and 2.71% respectively. When the JSE closed platinum was trading at $931.45 per ounce and palladium was recorded at $893.75 per ounce.
Brent Crude had a bounce higher towards the JSE close, gaining just over a dollar to trade at $45.79 per barrel when the JSE closed, this was after it reached intra-day lows of $44.81 per barrel. This move higher helped Sasol recoup some of the losses recorded earlier, as the stock reached intra-day lows of R350.14 before closing at R360.00 per share. This bounce in Brent Crude brings some relief to the commodity which has been under significant pressure over the past few weeks, but we have to wait & see if this is its turning point.
In terms of economic data, today was fairly light with nothing released from our local market but we did have the weekly Initial Jobless Claims numbers from the USA. This number indicated that this week’s jobless claims increased to 241 000, which was slightly higher than the forecasted 240 000 claims. The reaction to this data was fairly muted as there wasn’t much movement in the major currency pairs shortly thereafter.