JSE recovers as market shrugs off rating downgrades

The JSE started the week on a positive note, gaining 0.86% as the market followed firmer Asian markets and a strong showing by the Dow Jones industrial average on Friday.

The market shrugged off Friday’s rating downgrades by Fitch and Standard & Poor’s (S&P) with an expected US rate hike next week largely priced in following better than expected November US jobs data released on Friday.

 

Fitch downgraded South Africa from BBB to BBB-, one notch above subinvestment grade. S&P already has SA on BBB-, but shifted its outlook on South Africa from stable to negative.

The Dow closed 2.12% higher on Friday and the Nikkei closed its Monday session 0.99% firmer. The Hang Seng was up 0.24% and the Shanghai Composite was 0.34% firmer on Monday.

At 9.32am the all share was up 0.85% at 49,705.10 and the blue-chip top 40 had gained 0.84%. The market showed a broad-based recovery after the all share ended last week 4.56% lower.

The gold index was 3.42% higher and platinums added 3.15%. Resources recovered 1.33% and banks were up by 1.06%. Industrials gained 0.82%.

Nedbank Capital said the rating announcements were largely as expected as the rating agencies highlighted the well-documented risks to the domestic economy. This was overshadowed by a change in the outlook by S&P from stable to negative.

"This was largely priced into the market, with most participants having expected Fitch’s move to bring it in line with S&P."

Nedbank said the market could see some heightened volatility in the near term as the tail risk of the S&P move took effect.

"However, once the dust settles there is little new information. It was only a matter of time for the announcements to be made and, as such, we should see some stability emerge, albeit in the context on continued vulnerability and heightened risk," Nedbank said.

Among individual shares, Glencore rose 4.50% to R19.73.

Sasol was 1.60% firmer at R381.44.

Among gold stocks, Harmony gained 4.67% to R10.31.

Anglo American Platinum jumped 5.15% to R189.27.

Capitec bounced back by 2.36% to R569.62 among banking shares. Nedbank rose 1.91% to R201.77.

Steinhoff firmed 1.32% to R78.02 on its first listing day on the Frankfurt Stock Exchange amid an ongoing tax investigation on some of its German operations.

Naspers traded 0.92% higher at R1,995.59.

Mediclinic rose 2.21% to R109.36.