Wall Street blues and unlovely results give JSE the jitters
WALL Street blues, disappointing results by De Beers and fading hopes of a cut in interest rates played havoc with the JSE this week. Despite better-than-expected producer inflation figures, the market remained jittery as concerns over the US economy spread.
A dealer said the market would be waiting to see which way Alan Greenspan, chairman of the US Federal Reserve Board, goes on monetary policy.
Dealers said the long hoped-for interest rate cut was already fully priced into industrial shares and the longer it took for the cut to happen, the more despondent the market was likely to become.
Furthermore, concern about continuing volatility on the US markets was causing ripples of concern.
Should the Dow Jones industrial average correct sharply, the local market would feel the impact.
"The Dow and the JSE have taken little notice of the good economic data released during the past week - the fear is that a local interest rate cut is taking too long to happen and that the NYSE is in danger of overheating," a dealer said.
SA and the US released better-than-expected PPI figures which showed inflation was manageable for both countries. However, this has not allayed market jitters, dealers said.
The industrial index shed 117.2 points on Friday - its single biggest loss since 1996 - closing the day at 9 120. The all-gold index, which staged a bit of a recovery this week, closed the week 1 022 and the all-share index was down 90 points to 7 439.
Disappointing results were the order of the day. De Beers led the charge, posting less-than-spectacular earnings. The share nose-dived, taking with it associate . AnglosDe Beers lost 300c on Friday to add to the R15.50 loss since Wednesday's results. Anglo ended 675c lower at R255.
Ferrochrome producer Consolidated Metallurgical Industries plunged 220 points on Friday to close the day at R13.50.
CMI, 58% controlled by JCI, reported sharply reduced headline earnings to 43c from 292c. JCI lost 30 points to close the week at R34.80.
Afriband, the newly listed industrial holdings group, was one of the best performers this week, closing at R3 on Friday. On Tuesday Afribrand announced it had acquired Pinetown-based DowMont for R20-million. The acquisition is expected to add between 20% and 30% to Afribrand's bottom line.
The company issued another cautionary, which a dealer says looks like another acquisition. The share price has jumped from R1 on its listing debut, touching a high of R3.20.
Sentrachem, which is under a take-over bid by US group Dow, closed the week at R10.50. New Africa Investments, which this week announced it was taking over New Africa Financial Holdings in a deal worth R600-million, closed the week 15 points down on Friday.