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Johannesburg - Good news about the South African economy is spurring the rand on to new lows against most currencies, but the increased optimism is not spilling over to the JSE.
Share prices on the JSE once again drifted aimlessly on Friday as the strong rand continues to put a cap on the big dual-listed shares which represent more than 50% of the JSE’s market value.
The major indices on the JSE hardly moved as investors are waiting to see what is happening on global markets, which are also in limbo as there is increasing doubt about President Donald Trump’s ability to deliver the incentives for the US economy he promised in his election campaign and which have already been discounted.
The rand traded at R12.45 to the dollar at mid-morning on Friday, after closing at R12.57 on Thursday.
The strong rand was initially the result of a weak dollar - which is hovering around four-week lows but is now strengthening significantly against all the major currencies - on the back of expectations of a rate cut in South Africa in the foreseeable future.
The South African current account was at its smallest in nearly three years in the fourth quarter of 2016, and inflation also retreated in February.
A strong rand however means major South African companies - and resources companies in particular, which earn a major part of their income in foreign currencies - are now earning significantly less in rand. A firm rand also makes South African shares far more expensive for foreign investors.
The result was that the All-share index at mid-morning was 0.40% lower at 51 819 points, while the Top 40 index traded 0.39% softer at 44 671 points.
The Resources index was at that stage already 0.67% lower, while the Financial index traded 0.52% down. The Industrial index was in the black for most of the morning but lost 0.22% by mid-morning.
All eyes will be on the US Congress later today amid signs that a delayed vote on Trump's healthcare bill would go ahead later in the day, though it remained unclear whether it would be passed. Investors regard the vote as test for the Trump presidency that could show whether it can muster the backing needed to push through fiscal measures central to its promised economic agenda.
The major JSE shares which earn a major part of their income abroad did not move much at all today. MTN [JSE:MTN] was the busiest share on the JSE in terms of value, but lost 0.05% to R124.67. Steinhoff [JSE:SHF] traded 0.37% lower at R62.76.
Naspers [JSE:NPN] gained 0.35% to R2 243.93 and British American Tobacco [JSE:BTI] was 0.54% higher at R811.77. Sasol [JSE:SOL], whose share price is also hampered by the oil price which is at its lowest level in four months, gained only 0.11% to R358.35.
Among the big resources shares Glencore [JSE:GLN] lost 1.70% to R50.30 and Anglo American [JSE:AGL] was 0.99% lower at R196,56. BHP Billiton [JSE:BIL] was 0.74% softer at R196.28.
Financial shares were a mixed bag with FirstRand [JSE:FSR] losing 0.74% to R52.61. Barclays Africa [JSE:BGA] was barely in the black, gaining only 0.04% R157.63. Insurer Discovery [JSE:DSY] was 1.11% softer at R135.00 amid heavy trade.
