Please note: The Thebe Securities website will not be available from 9am tommorrow(Saturday 4 July) up until 3pm due to JSE testing.

Market outlook for the day – Friday 3 July 2009

After the weak local trading session yesterday, local stocks look set to show a moderate bounce at the start of local equity trading on the JSE today. The early gains are likely to be a function of generally higher commodity prices and positive European futures that are pointing to a higher start for European bourses this morning. Local Alsi futures were trading firmer this morning despite weaker trading in both Australian and Asian equity markets and the weaker close in the US markets last night. US markets will be closed today.

 

Other company news:

BHP Billiton (BIL)

BHP Billiton Ltd, the world's biggest miner, has agreed to sell its Yabulu nickel refinery to Australian mining magnate Clive Palmer for an undisclosed amount, BHP said in a statement on Friday. BHP would write down the value of Yabulu assets by $500 million and write off a further $175 million in unrecoverable tax benefits. The sale is expected to be finalised by July 31.

 

These are the leading articles in the South African financial press:

Business Day

- Policy of prudence bolsters South Africa's credit ratings

- Banks face a tough time – registrar

 

Business Report

- Treasury yet to decide on "foreign" JSE listings

- Teamwork kept local banks dry in tsunami

 

What happened yesterday?

South African Markets

South Africa's rand fell sharply against the dollar on Thursday as investors' appetite for risk waned on worries that the global economy will remain weak for some time, while stocks fell on lower commodity prices. The JSE's Top-40 index of blue chips fell 2.69 percent to 19,919.35 points and the broader All-share index retreated 2.36 percent to 22,174.13 points.

 

Wall Street

U.S stocks tumbled on Thursday, driving the S&P 500 down to its third-straight weekly loss, as a steeper-than-expected slide in June non-farm payrolls revived caution about economic recovery prospects. The Dow Jones industrial average dropped 223.32 points, or 2.63 percent, to 8,280.74. The Standard & Poor's 500 Index slid 26.91 points, or 2.91 percent, to 896.42. The Nasdaq Composite Index sank 49.20 points, or 2.67 percent, to 1,796.52.

 

Global markets

Asian stocks retreated on Friday and the dollar edged up after a disappointingly big drop in U.S. employment prompted investors to pull back from commodities, resource-linked shares and higher-yielding currencies. The MSCI index of Asia-Pacific shares outside Japan dipped 0.6 percent and was down about 1 percent during the first three trading days of the third quarter. In the April-June quarter, the MSCI benchmark for Asian shares surged 32 percent -- its biggest quarterly gain since 1993 -- on investor hopes that Asia's emerging economies would help lead the global economy out of the doldrums.

 

Commodity and currency report

Gold rose on Friday and hovered above $930 per ounce, with investors keeping an eye on the dollar, which rose the previous day when bleak U.S. jobs data enhanced the dollar's safe-haven appeal and hurt bullion. Gold tracked the dollar, inching higher as the U.S. currency trimmed earlier gains against the euro, but rises were limited as investors stayed on the sidelines and jewellery demand was weak.

 

Gold rose 0.5 percent to $933.35 per ounce, compared with New York's notional close of $928.65 on Thursday. U.S. gold futures for August delivery rose 0.3 percent to $933.4 an ounce, compared with $931.0 on the COMEX division of the New York Mercantile Exchange. U.S. financial markets are closed on Friday for the Independence Day holiday. Traders said if gold prices managed to reach $950 it could give them incentives to test the market's upside.

 

Reflecting a slowdown in investments, the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings were 1,120.55 tonnes as of July 2, unchanged from the previous business day. Indian data showed the country's gold imports stood at about 59.8 tonnes in the first six months this year, down 57 percent from the same period last year. India's gold imports in June were likely around 8 to 10 tonnes, down 24 tonnes from the same month a year ago, a senior official from Bombay Bullion Association said this week.

   

The European Central Bank kept interest rates at 0.1 percent on Thursday, bolstering expectations they will stay there well into next year. ECB President Jean-Claude Trichet gave no sign the ECB was planning to move rates from the current record low level soon, saying they remained "appropriate". Gold fell on Thursday as worse-than-expected U.S. jobs data dented gold's appeal as a hedge against inflation and bolstered the dollar. The dollar gained as bleak economic recovery prospects enhanced the U.S. currency's safe-haven attraction.

 

A rise in the dollar weakens investors' need to use bullion as a hedge against falls in the value of dollar-denominated assets and weighs on gold prices. The dollar was up 0.1 percent against the euro and nearly flat against the yen on Friday.