The major indices on the JSE ticked higher on Monday as a softer rand saw the local bourse outperform global equity markets.
The rand slid to R14.51 by the close of the session, as the currency fell under renewed pressure following news that key National Treasury official, Michael Sachs, had resigned over presidential interference at National Treasury to push through free tertiary education.
In the capital market, bond yields rose as the local currency lost ground. The yield on the benchmark R186 2025 edged up to 9,46% from 9,03%.
The All-Share index gained 0.08%, while the blue-chip Top 40 index climbed 0.20% - propped up by dual listed rand hedges.
Vodacom [JSE:VOD] dropped 3.35% to R147.34 after reporting a 7% increase in first-half net profit to R6.7bn to end-September, with data revenue exceeding voice for the first time. The meagre growth combined with a 1.3% slash of the dividend, at R3.90 per share, pushed the price lower.
Richemont [JSE:CFR] gained 0.10% to R125.21 per share. For the six months ended 30 September 2017, sales grew by 10% in actual currency with like-for-like sales up 8% in constant currency if the prior period inventory buy-back is excluded. Operating profit grew by 46% and by 11% if the prior period abnormal items are excluded. There has been a significant recovery in the luxury goods sector, as the important Asia-Pacific region has kick started luxury buying again, with the region accounting for almost 40% of sales.
The presidency did release the long-awaited Heher commission report into the possibility of free tertiary education on Monday, however there was no announcement from the presidency on free education. The report delves into the feasibility of making higher education and training free in South Africa.
Gold traded flat at $1279/Oz as prices continued to hold firm above the October lows as the sideways drifting trend for gold continues against a backdrop of strong global equity markets and a rising crude oil price. The Congressional struggle over tax reform may also play into the hands of gold bulls, as many investors on Wall Street are banking on the delivery of a tax reform bill by the end of the year.
Brent Crude eased slightly to $63.29/bbl as expectations that OPEC and other producers will extend their production cut agreement were offset by U.S. drillers adding the most oil rigs in a week since June, indicating output will continue to grow. The increased price of oil combined with the weaker rand is set to squeeze the South African market, with food inflation coming under serious pressure going forward.
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