Rate decision weighs on JSE
June 25, 2009
By Gareth Vorster
The JSE ended down on Thursday, weighed by the Reserve Bank's Monetary Policy Committee decision to leave the interest rate unchanged.
The repo rate was widely expected to be cut by a further 50 basis points. By 5pm, the JSE all share index had weakened 1.05% with resources giving up 1.23%, but platinum counters added 1.06% and gold miners advanced 1.40%. Banks edged 0.78% lower, with financials down 0.77% and industrials off 1.00%.
The rand was last bid at R8.03/$ from R8.05/$ when the JSE closed on Wednesday. Gold was quoted at $935.40/oz from $927.80/oz at the JSE's last close, and platinum was at $1 182/oz, from $1 174.50/oz at its previous close.
A local trader said: "The market was taken by surprise by Mr Mboweni's decision to leave the interest rate unchanged. We lost ground immediately after that, despite a good Dow opening.
"The rate decision has strengthened the rand, and along with a bond rally, has weighed against equity markets," the trader said.
Dow Jones Newswires reports that gains in the energy and industrial sectors helped major stock indexes advance on Thursday despite a jump in jobless claims.
The Dow Jones Industrial Average, which was on a four-day losing streak coming into Thursday's action, was recently up. The Dow's energy names, Exxon Mobil and Chevron, were bright spots, helped by a 70-cent jump in oil prices near US$70 a barrel in New York as buyers came off the sidelines following an attack by rebels on a pipeline in Nigeria owned by Royal Dutch Shell.
Commodity and industrial stocks including Alcoa, Caterpillar and United Technologies were also strong. Participants on both commodity- and stock-trading floors have been spooked lately by the prospect of a more prolonged global recession than previously feared. That sentiment carried into Thursday's session, with many investors staying on the sidelines.
In economic news on Thursday, the government reported that number of US workers filing new claims for jobless benefits jumped last week and total claims lasting more than one week rebounded after a sharp drop the previous week.
The government's final reading on first-quarter gross domestic product showed the economy didn't contract quite as rapidly as previously thought. GDP shrank at a 5.5% annual rate in the first three months of the year, better than the 5.7% reading in the last report.
Treasury prices were mixed ahead of the last big auction of the week, of $27 billion in seven-year notes. The yield on the benchmark 10-year note hovered around 3.70% in recent trading. The dollar was stronger. Commodities prices rose, with crude oil, copper and gold futures edging higher.
Among equity movers on the JSE, Anglo American lost R4.99, or 2.08%, to R235 and BHP Billiton shed R8.14, or 4.40%, to R176.81. Sasol added R7, or 2.66%, to R270.
ArcelorMittal gained R3.30, or 3.63%, to R94.30, but Kumba Iron Ore declined R8.79, or 4.59%, to R182.71.
Diversified miner Exxaro added R1.19, or 1.53%, to R78.80 and African Rainbow picked up R2.94, or 2.31%, to R130.34.
AngloGold Ashanti advanced R4.50, or 1.52%, to R300 and Harmony added R1.80, or 2.12%, to R86.80, with Gold Fields up R1.10, or 1.13%, to R98.10.
Anglo Platinum collected R3 to R529 and Impala Platinum was up R2.52, or 1.51%, to R169, but Lonmin dropped R6, or 3.70%, to R156, along with Aquarius, down R1.41, or 4.42%, to R30.50.
Among industrials on the JSE, SABMiller fell R4.71, or 2.77%, to R165.52, Imperial was down R1.65, or 2.79%, to R57.50, and British American Tobacco shed R5.76, or 2.53%, to R221.56. Bidvest dropped R2.20, or 2.32%, to R92.80 and Pretoria Portland Cement gave up R1, or 3.40%, to R28.34. AECI gained R3.07, or 7.06%, to R46.57.
Standard Bank declined 74 cents to R84.26, with Nedbank down R2.89, or 3.01%, to R93.10 and Absa off R1.08, or 1.03%, to R103.99. Media group Avusa eased 10 cents to R18.90.
Retailer Massmart lost R1.61, or 1.98%, to R79.79, Foschini fell R1.17, or 2.29%, to R49.85 and Shoprite lost 60 cents, or 1.09%, to R54.40. Spar, however, gained R1.43, or 2.55%, to R57.60.
Paper group Sappi gave up 99 cents, or 4.13%, to R23.01, but rival Mondi picked up R1.10, or 3.44%, to R33.10. MTN Group was off R2.25, or 1.86%, to R118.51, Telkom gave up 21 cents to R36.79 and Vodacom shed 25 cents to R55.75.
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