JSE ends down amid risk aversion
November 20, 2009
By Palesa Motloung
The JSE ended in the red on Friday amid weaker commodity prices and a frail Dow with profit taking and risk aversion back in the market after a few days of good gains.
At 5pm the JSE all share index had weakened 0.48%, with resources down 0.40%. Platinum miners collected 0.36% and gold producers added 1.50%.
Banks were down 1.07%, financials gave up 0.66% and industrials were off 0.48%.
The rand was bid at R7.55/$, from R7.52/$ when the JSE closed on Thursday.
Gold was quoted at $1,140.75/oz from $1,136.35 at the JSE's last close, and platinum was at $1,433/oz, from $1,449/oz at its previous close.
"We ended down today. The US opened lower and the commodity prices are down," a trader said.
"Risk aversion is back in the market. The strong dollar is putting the commodity prices under pressure.
"The gold sector is the only sector that is up, maybe it's people seeking safety," he said.
"It was expected though, we just didn't know when it would happen.
"We are just seeing some profit taking after a good few days of good gains," he concluded.
Dow Jones Newswire reported that US stocks opened slightly lower on Friday, as a bigger-than-expected drop in Dell's latest quarterly earnings weighed on the technology sector, prompting investors to continue moving away from riskier investments and into the safety of the dollar.
The Dow Jones Industrial Average was recently down 5 points at 10329. Alcoa was the measure's weakest component, off 1.4%. Caterpillar also fell more than 1%.
Technology components Cisco and Intel were down about 0.7% each, reflecting disappointment across the sector after Dell reported a 54% drop in its fiscal third-quarter profit, missing analysts' estimates on a double-digit drop in revenue.
Shares of Dell, which is not a Dow component, tumbled 8% recently.
The technology-heavy Nasdaq Composite fell 0.5%. The Standard & Poor's 500 index declined 0.4%, led by its technology sector.
Friday's small declines cap a week that began on a high note, with the Dow industrials reaching new highs for the year earlier in the week, but has since gone downhill as mixed economic reports and weak forecasts from a number of retailers prompted a move away from riskier equities and into areas of perceived safety.
"To me the market's overdone right now and with Dell's earnings being a disappointment and the dollar up, I can understand why the market's lower," said Terry Morris, co-portfolio manager at National Penn Investors Trust.
Still, Morris said he was surprised the market has been so resilient, as Friday's early declines were minimal.
At the time the JSE closed, the Dow Jones Industrial Average was flat, down 0.13%.
On the JSE, Anglo American Plc gave up R2.08 to R315.50 and BHP Billiton lost R2.52, or 1.10%, to R227.52.
Petrochemicals group Sasol declined R2.99, or 1.01%, to R292.
Paper group Sappi added R1.15, or 3.73%, to R32.
Kumba Iron Ore put on R1.76 to R256.63.
AngloGold Ashanti picked up R4.01, or 1.23%, to R329, Gold Fields added R2.45, or 2.29%, to R109.40 and Harmony edged up 45 cents to .
Platinum miner Anglo Platinum was up R2.35 to R707.35 and Impala Platinum collected 77 cents to R169.47, but Lonmin gave up R1.41 to R210.25.
In diversified miners, African Rainbow fell R2.10, or 1.30%, to R159.90.
Elsewhere on the JSE, SABMiller weakened R1.25 to R215.50, Barloworld was off R2.86, or 5.51%, to R49.04, Imperial fell R1.33, or 1.62%, to R80.55 and British American Tobacco declined R4.47, or 1.83%, to R239.75.
Among banks, Standard Bank lost R1.43, or 1.48%, to R95.45 and Absa fell R1.95, or 1.55%, to R124.05.
Financial services group Old Mutual edged up 11 cents to R14.70, but Sanlam was down 55 cents, or 2.48%, to R21.59.
Sugar group Illovo weakened 67 cents, or 2.12%, to R31 and Tongaat Hulett shed R3.51, or 3.58%, to R94.49.
Media group Avusa gave up R1.29, or 7.46%, to R16.01.
Earlier it reported headline earnings of 39 cents for the six months ended September 30, from 97 cents previously.
An earnings per share was at 44 cents, from 155 cents previously, a drop of 72%.
Revenue from continuing operations decreased 5% from R2.3 billion to R2.2 billion.
The group reported operating profit of R77 million, from R177 million earlier, a decline of 56%.
Operating costs, revealed a marginal R3 million increase over last year's costs, 'reflect the successful implementation of group-wide cost-cutting initiatives," the group said.
It further pointed to a 20% decline in advertising revenues with newspaper, magazine, digital and out-of-home businesses advertising sharply lower in what it termed an extremely tough trading period.
"In particular, recruitment advertising reduced as employers shed jobs and limited appointments," it said.
Retailer Pick n Pay weakened R1.12, or 2.74%, to R39.81, Lewis was down R1.79, or 3.47%, to R49.86 and Shoprite declined 87 cents, or 1.38%, to R62.10.
Liberty International was down R1.05, or 1.71%, to R60.45.
Construction group Aveng moved 55 cents, or 1.37% lower, to R39.55 and Basil Read declined 50 cents, or 3.24%, to R14.95.
Telecommunications group MTN group inched up 17 cents to R119.77, but Telkom declined 67 cents, or 1.66%, to R39.60 and Vodacom weakened 70 cents, or 1.21%, to R57.30.
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