SOUTH African markets were weaker across the board on Friday with the previous day’s risk-on rally fading on renewed talk about a possible US interest rate increase in September.
Higher US interest rates usually support the dollar in risk-off trade.
Comments by two US Federal Reserve officials on Thursday night were more hawkish than the sentiment indicated in the Federal open market committee (FOMC) minutes for July, released earlier in the week.
New York Fed president William Dudley expressed optimism about the outlook for hiring and growth in the US economy, while San Francisco Fed president John Williams said the central bank should move to raise interest rates "sooner rather than later", Dow Jones Newswires reported.
The US leading indicator rose a monthly 0.4% in July from 0.3% in June.
There were no other important data released on the day. Commodity prices were lower and the Brent crude price softened, although it held above $50 a barrel.
The JSE all share closed 0.41% lower at 52,772 points and the blue-chip top 40 dropped 0.41%. Platinums retreated 2.21%, food and drug retailers dropped 1.67%, and general retailers were 1.07% lower. Banks retreated 0.89% and resources shed 0.71%.
The all share ended the week down a marginal 0.07%. It is up 4.1% for the year.
The Dow Jones industrial average was 0.12% lower at the JSE’s close. The FTSE 100 had lost 0.20% and the Paris CAC 40 had retreated 0.89%. Germany’s Dax was 0.52% lower.
Global markets are in disarray about the US rate trajectory which has resulted in choppy trade becoming the norm.
Analysts said US economic data had been mixed lately, supporting a recovery in US GDP growth, but was probably still too low for the US Federal Reserve to risk interest-rate increases with confidence later in the year. US inflationary growth had also not been firm enough to support rate increases.
Stanlib economist Kevin Lings said although the US leading indicator was higher in July, it was still not robust and only indicated modest growth.
"Although some improvement in US growth is expected in the second half, the rate of expansion is likely to still be modest and, at 2%, well below the average GDP growth of 3%," Lings said.
He said the data indicated the US was unlikely to return to recession conditions. "But it also reflects limited inflationary pressure from economic activity over the coming year," Lings said.
The Fed has set 2% consumer inflation as the likely level at which it will increase rates again. Latest headline consumer inflation is at an annual 0.8% and core inflation is at 1.6%.
Among individual shares on the JSE, petrochemical group Sasol was up 1.19% to R38 and Kumba Iron Ore gained 2.30% to R141.18.
British American Tobacco picked up 0.84% to R853.72, with industrial group Bidvest gaining 0.57% to R156.57.
Nedbank, which has rallied more than 10% this month, gave up 0.43% to R226.53. Standard Bank lost 1.93% to R150.04 after gaining 7% on Thursday following the release of its interim results. Capitec was off 2.17% at R607.52.
Discovery was down 2% to R122.50 and Sanlam dropped 1.76% to R65.70.
After trading 2% weaker Truworths ended the day flat at R84.02 as the market adopted a more sober view on the full-year results released on Thursday when it dropped 8.2%.
Woolworths ended the day down 2.13% at R89.21.
PSG shed 2.08% to R195.18. It has lost 12.6% in the year to date.
The rand weakened more than 10c against the dollar in late afternoon trade as the greenback clawed back some lost ground against the euro.
At 5.45pm‚ the rand was at R13.5168 against the dollar from R13.3744 at the previous close. It reached a worst level of R13.54/$ in intraday trade.
It was at R15.3067 against the euro from R15.1911 previously‚ and at R17.6578 against the pound from R17.6159 previously.
The euro was at $1.1324, from at $1.1355.
South African bonds were also weaker in late trade, taking their cue from the weaker rand.
At 5.54pm, the benchmark R186 government bond was bid at 8.470% and offered at 8.460%, from 8.395% at the previous close.
The R207 was bid at 7.800% and offered at 7.795% from a previous close of 7.730%.
South African futures tracked the JSE and global markets weaker as investors began to price in the greater likelihood of a US interest-rate increase this year.
At 5.35pm the local near-dated top-40 Alsi futures index was 0.38% weaker at 45,961 points, with 23,278 contracts traded from 29,796 on Thursday.
(With Ray Fauré)
