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JSE treads water as world awaits Yellen speech

Johannesburg - The JSE was treading water in tandem with global markets on Friday morning, as the financial community awaits a key speech by Federal Reserve chair Janet Yellen later in the day.

By mid-morning, the major indices had moved only marginally as investors mostly occupied the sidelines.

Yellen’s speech at the Fed's annual meeting at the mountain resort of Jackson Hole in Wyoming will hopefully give a clear picture of the timeframe to raise interest rates.

Initial indications were that the Fed will not move too soon while global markets are still in turmoil after Brexit, but latest pronouncements from senior Fed officials seem to indicate a strong possibility of a hike later this year.

This could have a negative influence on emerging markets such as the JSE as investors currently seeking higher yields outside the developed world, where interest rates are at record lows, may revert some of those investments to the US, where the risks are perceived to be much lower.

At mid-morning the All-share index traded 0.04% lower at 53 485 points, but the Top 40 index was 0.04% higher at 46 780 points.

Although resources and financial shares were modestly higher, the overall market was pulled lower by the major dual-listed shares in the Industrial index. Foreign investors on the JSE are particularly interested in them, as they earn most of their income outside South Africa and are therefore not so dependent on local economic conditions.

Most of these shares, which represent more than half of the JSE’s market capitalisation, are part of the Industrial index which at mid-morning was 0.19% lower.  

The resources shares were 0.48% higher as the dollar took a breather before Yellen’s speech, and the Financial index gained only 0.05%.

Most of the big dual-listed shares were trading lower for a second day, after Wednesday’s strong surge when investors used the rand's sharp drop to buy rand hedge shares.

British American Tobacco [JSE:BTI] traded 1.12% softer at R897.00 and Richemont [JSE:CFR] was 1.09% lower at R86.15. The two beer giants, SABMiller [JSE:SAB] and Anheuser-Busch InBev (AB Inbev) [JSE:ANB], were both down. SABMiller lost 0.48% to R816.95 and AB InBev 0.77% to R1 791.47.

Naspers [JSE:NPN] also started the day lower and the share price fell to R2 363.88 before recovering. By mid-morning it was 0.17% stronger at R2 385.21.

MTN [JSE:MTN] was 1.11% firmer at R122.61 after trading as high as R123.84. The company announced it will launch another BEE scheme worth R9.9bn to be called MTN Zakhele Futhi when the current schemem MTN Zakhele [JSE:MTNZBE]m expires in November. MTN Zakhele is widely viewed as having created value for investors. 

Glencore [JSE:GLN] recovered strongly on Friday after two days of losses in response to the 66% earnings drop announced earlier this week. By mid-morning the share traded 2.94% higher at R34.29. BHP Billiton [JSE:BIL] was 0.84% firmer at R197.94 and Anglo American [JSE:AGL] gained 1.47% to R158.86.

Woolworths [JSE:WHL], whose share price rose strongly on Thursday on the back of solid results, gave some of this back as investors took profits. By mid-morning it traded 2.5% softer at R84.80. Shoprite [JSE:SHP]was 0.35% lower at R194.52 and Massmart [JSE:MSM] lost 0.92% to R131.89.

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