JSE closes flat on platinum, gold stocks as retailers drop on disappointing data
Johannesburg-SA (Marc 15) The JSE closed flat on Wednesday as disappointing retail sales data dragged retailer stocks down, and gold and platinum shares lost ground despite flat commodity prices. The firmer rand towards the end of the trading day caused platinums and golds to retreat, while resources pared some of the gains on the day.
At the JSE’s close, the platinum price was flat at $937.33 an ounce. Gold was up 0.15% to $1,200.54 an ounce.
The market was awaiting the results of the Dutch election, which may confirm further gains among populist parties in Europe, while the US Federal Reserve was expected to announce an interest rate increase in the evening, the third since December 2015.
Earlier polls indicated a less strong performance from the right-wing Dutch PVV party, led by Geert Wilders, but markets were still jittery. "The trend of polls under-estimating the populist vote, as we saw last year in the UK Brexit referendum and US presidential election, would favour Wilders," said Oanda analyst Craig Erlam.
Should we see similar results today, it would cause great concern ahead of the French election over the next couple of months, as Marine Le Pen stands a realistic chance of winning, Erlam said.
“It was the worst annual decline in retail sales since the global financial crisis in 2009, and this was even before the impact of recent tax hikes.”
The dollar was somewhat weaker in late afternoon trade against the euro, indicating the market was not expecting an overly hawkish stance by the Fed on further increases this year.
The stronger rand pulled down industrials, with banks drifting upwards at the close in choppy trade. Market focus was on retailer stocks following the release of retail sales data that indicated sales fell by 1.2% in January, after declining by 2.5% in December, in real terms.
Stanlib economist Kevin Lings described the data as shocking. "It was the worst annual decline in retail sales since the global financial crisis in 2009, and this was even before the impact of recent tax hikes," he said, adding that consumer confidence had weakened considerably on a sustained increase in user-charges, such as electricity and water, while the unemployment rate was at a record high and the fuel price remained high.
"Together with high interest rates, and with the minister of finance recently increasing a range of taxes, all these factors would most likely further dampen retail spending during the coming months," Lings said.
The all share closed flat at 51,701.60 and the blue-chip top 40 added 0.01%. Platinums lost 2.19% and the gold index shed 1.88%. General retailers lost 0.40%, and food and drug retailers closed 0.14% down. Resources added 0.47%, banks gained 0.25%, and property rose 0.13%.
The Dow Jones industrial average was 0.19% higher at the JSE’s close. European markets were firmer with the FTSE 100 gaining 0.25%, the Paris CAC 40 0.22%, and the German Dax 0.20%.
Among the big miners, Glencore closed 2.78% higher at R51.70, while Anglo American added 1.12% to R190.99.
Source: BusinessDay
