Weak JSE braces for ECB decision

The JSE stayed weaker across the board as investors around the world held their breath ahead of the European Central Bank's (ECB's) interest rates decision later today.

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The JSE stayed weaker across the board at noon on Thursday, as investors around the world held their breath ahead of the European Central Bank's (ECB's) interest rates decision later today.

By 12:06 local time, the JSE all-share index lost 0.37%, with gold counters giving up 1.23%, platinum miners falling 0.66% and resources shedding 0.54%. Banks lost 0.31%, financials declined 0.16% and industrials were 0.28% lower.

The rand was bid at 6.71 to the dollar from 6.68 at the JSE's close on Wednesday. Gold was quoted at US$1,457.86 a troy ounce from US$1,456.85/oz at the JSE's previous close, while platinum was at $1,786.00/oz, from $1,800.50/oz previously.

An equity derivatives dealer said the euro-zone central bank was expected to increase rates. “The key questions are: what is the bank's commentary going to be and whether this anticipated hike signalled start of aggressive monetary policy,” equity derivatives dealer said.

Dow Jones Newswires reported that European stocks were higher on Thursday, with investors cheered by Portugal's request to its European Union (EU) partners for a bailout to help it with its escalating debt problems, ending weeks of speculation and concern.

“We have long thought that a Portuguese accession into an adjustment programme was likely, and ultimately helpful for the country as it undertakes much needed structural adjustments to bolster growth and regain international competitiveness,” said Goldman Sachs chief interest rate strategist Francesco Garzarelli.

Commentators were also suggesting that Spain would not succumb to a similar bailout request, further boosting sentiment in Europe.

By 10:00 SA time, the Stoxx Europe 600 index was up 0.2% at 282.20. London's FTSE 100 was up 0.1% at 6,044.60, though a fall in mining stocks after the price of gold eased from recent record highs weighed. Frankfurt's DAX was flat at 7,215.53 and Paris's CAC-40 was 0.2% higher at 4,057.21.

Undoubtedly, the focus is on the Bank of England rate announcement at 11:00 GMT and ECB rate announcement at 11:45 GMT. The latter is expected to raise interest rates by 25 basis points, despite Portugal's move for aid.

On the JSE, Anglo American (AGL) fell 77 cents to 358.00 rand, BHP Billiton (BIL) lost 1.90 rand to 276.00 rand and Sasol (SOL) shed 19 cents to 401.82 rand.

Among gold counters, Anglogold Ashanti (ANG) declined 4.64 rand or 1.37% to 333.36 rand, Harmony (HAR) gave up 1.60 rand or 1.55% to 101.65 rand and Randgold (RNG) slumped eight cents or 2.78% to 2.80 rand.

Among platinum stocks Impala Platinum (IMP) eased 1.49 rand to 200.22 rand.

Diversified miner Exxaro (EXX) slid 2.25 rand or 1.31% to 170.00 rand.

In the industrial sector, Bidvest (BVT) lost 27 cents to 150.38 rand. Bidvest (BVT) on Thursday announced the conclusion of a 1.6 billion rand share repurchase agreement with its Dinatla empowerment partners. The Dinatla consortium is majority owned by prominent black entrepreneurial businesses and also comprises broad-based black economic empowerment (B-BBEE) companies.

The consortium acquired 15% of Bidvest, which amounted to 45 million shares. The arrangement was refinanced three years later when Dinatla reduced its stake to a residual holding of 26.5 million ordinary Bidvest shares. The trader said this deal had already been done.

Mondi Group (MND) was off 40 cents at 65.10 rand after announcing on Thursday that it intended to demerge its interest in Mondi Packaging SA, which would be listed under a new name on the JSE.

In terms of this proposed demerger, all the ordinary shares in Mondi Packaging SA held by Mondi Limited would be distributed to the Mondi Limited ordinary shareholders.

The shareholders had also agreed to the recapitalisation of Mondi Packaging SA ahead of its listing, with a view to creating a long-term capital structure for the business based on net debt of about two times current earnings before interest, tax, depreciation and amortisation.

RMB Holdings (RMH) plunged 1.13 rand or 3.86% to 28.15 rand.

Old Mutual (OML) rose 20 cents or 1.28% to 15.77 rand. The company on Thursday announced that, following receipt of the remaining regulatory approval from the New York State Insurance Department, completion of the sale of its US Life business to Harbinger Group had taken place. As previously announced, the sale price was US$350 million.

Construction group M&R Holdings (MUR) gained 48 cents or 1.75% to 27.98 rand and Group Five (GRF) advanced 71 cents or 2.39% to 30.36 rand.

Pioneer Foods (PFG) collected 1.86 rand or 3.26% to 58.86 rand. - I-Net Bridge

Source: http://www.iol.co.za/weak-jse-braces-for-ecb-decision-1.1053647

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