THE JSE closed weaker on Wednesday as a combination of lower oil prices and the expectation of a rise in US interest rates in December weighed on the market.
The terrorist saga in Paris kept investors cautious, with resources advancing marginally on the day, but gold and platinum shares were weaker.
Local consumer inflation and retail sales data released on the day failed to make a convincing case for the Reserve Bank to announce an interest rate rise on Thursday. The consumer price index rose 4.7% in October, as expected, while retail sales growth of 2.7% year on year was lower than predicted.
After the risk rally in October, markets are adjusting to the prospect of a US Federal Reserve hike in December amid a mixed growth and inflation backdrop, Barclays Research said in a note.
“Recent signs show typical risk-averse behaviour ahead of a well-known risk event, with investors raising cash holdings and cutting risk exposures.”
With a futures-implied probability of a December hike still at 68%, Fed concerns are likely to keep markets in a holding pattern if data support our view of a hike next month, Barclays said.
The Dow was 0.54% firmer at the JSE’s close, the FTSE 100 was flat (0.09%) and the CAC 40 was down 0.58%. The Dax was also flat (-0.04%).
At 5pm the all share closed 0.63% lower at 51,654.50 and the blue-chip top 40 dropped 0.61%. Resources lifted 0.76%, the gold index was down 2.65% and industrials lost 0.84%. Financials ended the day 0.57% weaker and banks shed 0.47%. Platinums were 0.35% down.
TreasuryOne chief dealer Wichard Cilliers said mixed Asian trade led to a weaker bias on the JSE as US equities ended Tuesday flat after promising US inflation figures added support to the Fed’s desire to raise interest rates in December.
“All but one of the inflation figures showed signs of an economy entering a cycle of monetary tightening.”
Brent crude traded below $44 a barrel for most of the day, but recovered somewhat in the early evening, despite stockpiles across the globe continuing to rise.
Copper prices have slid to lows over the past month on fears of a global slowdown.
“It is as if the market believes China isn’t growing at all, while it is, only at a slower pace.”
Locally, inflation and retail sales data should not give the Reserve Bank any reason to hike just yet. Although the Bank is expected to convey a hawkish tone, a hike in January seems more likely, Mr Cilliers said.
Among individual shares on the JSE, Glencore rose 4.98% to R20.24.
Sasol was 0.92% weaker at R398.29. The Brent crude price was up 0.68% to $44.21 a barrel at the JSE’s close.
Kumba Iron Ore jumped 8.39% to R45.99, but ArcelorMittal shed 5.77% to R4.90.
Troubled platinum producer Lonmin rose 2.27% to R2.25 ahead of the vote by shareholders on the group’s controversial $407m rights issue on Thursday.
Among banks Barclays Africa retreated 2.45% to R163.92.
Retailer Woolworths gained 3.36% to R103.50, but Mr Price shed 5.52% to R202.19 in volatile trade. Mr Price earlier reported headline earnings per share increased by 15.2% to 427.6c per share in the 26 weeks to end September.
Among property stocks Arrowhead A shares ended the day 1.04% lower at R9.55. Arrowhead B shares dropped 1.68% to R9.36 after the group reported full-year distribution rose 13%.
Cement producer PPC rose 5.05% to R16.02 but Telkom dropped by 5.26% to R61.46.
Tongaat Hulett lost 3.85% to R100.
Brait softened 1.67% to R155 despite reporting good interim results on Tuesday.
Newly listed asset manager Sygnia was 4.95% lower at R15.16. Anchor Group rose 2.38% to R17.20, a new high.