JSE turns negative in late trade amid Brexit uncertainty

The JSE closed lower on Friday as investors sat on their hands ahead of a busy week of key events.

Brexit remains in focus for most international investors, with British Prime Minister Boris Johnson having called for a general election on December 12.

Johnson has secured a deal with Brussels on the nitty gritty of Brexit, but the EU has not yet decided on whether it will grant Britain an extension on the October 31 deadline and for how long. The British parliament still has to approve a date for a general election.

International markets were mixed, with most a little higher on optimism that the US and China will soon finally reach a deal in an attempt to end their 15-month trade war, which has had a chilling effect on the global economy. “While global indices are grinding higher, safe-haven flows are still seeing decent demand for gold and treasuries,” said Oanda analyst Edward Moya.

On Wednesday, finance minister Tito Mboweni will present his medium-term budget policy statement (MTBPS), which will outline the government’s budgetary plans for the next three years.

Analysts say Mboweni has a difficult task ahead of him as weakening GDP growth, coupled with increased government spending and a higher national debt burden, leave him little space for comfort.

Investec economist Kamilla Kaplan said the MTBPS will provide the main domestic influence on the rand, which capped four weeks of gains on Friday, and is having its best month against the dollar since June.

Kaplan said that Mboweni’s speech will highlight “the implications for SA’s sovereign credit rating amid elevated government debt levels and financial pressure from Eskom”.

Friday sees ratings agency Moody’s Investors Service release a report on its latest review of SA’s sovereign credit rating.

“It is widely expected that the mediumterm budget will outline efforts towards fiscal consolidation, and that a downgrade by Moody’s will be avoided.

“However, in view of the expected deterioration in fiscal metrics, it is possible that the stable outlook will be revised to negative,” Kaplan said.

The JSE all share fell 0.61% on Friday with the top 40 relinquishing 0.54%. Industrials led the losses, down 1.4%, while gold miners rose 1.38% and resources 0.47%.

AB InBev’s share price slumped nearly 10% to R1,210 after it warned of falling sales in South Korea and Brazil due to price increases in those countries. The fall wiped about

R200bn off the group’s market capitalisation, putting it on track for its worst monthly performance since listing in 2016.

Anglo American led gains among the larger diversified miners, up 1.02% to R376.18. Subsidiaries Kumba Iron Ore and Anglo American Platinum, however, lost 2.02% to R356.64 and 1.51% to R1,068.89, respectively.

At 6pm, the rand had gained 0.69% to R14.5902/$ 0.89% to R16.1786/€ and 0.77% to R18.7361/£. The euro weakened 0.2% to $1.1082. The rand has now risen 3.63% against the dollar in October.

Gold was up 0.1% to $1,504.65/oz, with platinum adding 0.81% to $929.51. Brent crude tacked on 0.23% to $61.62 a barrel.

The Dow was up 0.76% to 27,010.24 points, while in Europe, the FTSE 100 was flat, France’s CAC 40 rose 0.67%, and Germany’s DAX 30 0.17%.