ZSE losses continue, JSE rally on US Fed statement

The industrial index was marginally lower at 162.03 points following a 0.02 points loss.

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Traders work at their screens in front of the German share price index DAX board at the stock exchange in Frankfurt March 18, 2015.         REUTERS-Stringer-Remote

Traders work at their screens in front of the German share price index DAX board at the stock exchange in Frankfurt March 18, 2015. CREDIT: REUTERS/STRINGER/REMOTE

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MEIKLES was a cent softer at 11.50 cents, ZPI dropped 0.20 cents to close at 0.80 cents and DAWN lost 0.05 cents to close at 0.95 cents.

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For the movers, ECONET was the only counter in the positive territory after adding a cent to 52 cents.

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The mining index was flat as Bindura, Falgold, Hwange and Riozim were unchanged at 4.49 cents, 0.50 cents, 4.10 cents and 7 cents respectively.

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In South Africa the JSE rally inspired by the US Federal Reserve’s statement faded towards the close on Thursday‚ but sharp increases in Naspers and gold stocks guided the market to a higher finish.

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After rising nearly 2% in early-morning trade on the US Fed’s more dovish view‚ the JSE closed about 1% higher as banks and financials lost support before the close.

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In its statement on monetary policy on Wednesday‚ the Fed dropped its previous view to remain “patient” before lifting interest rates.

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Global markets also took a breather after rising strongly on the statement‚ which indicated the interest-rate hiking cycle in the US could now commence in September rather than the previously widely held view of June.

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US stocks had fallen by the JSE’s close‚ with the Dow Jones industrial average 0.52% weaker‚ while the S&P 500 index was 0.3% lower. European markets were mixed‚ as the UK FTSE 100 gained 0.11%‚ while Paris’s CAC 40 was 0.43% down.

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The all share closed 1.06% higher at 52‚741.02 and the blue-chip top 40 gained 1.12%. Gold shares gained 5.96% and resources lifted 2.81%. Platinums added 1.66% and industrials were 0.92% up. Financials were flat (0.03%) while banks ended the day 0.49% lower.

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The JSE on Thursday traded at a price:earnings of 18.3‚ raising further concerns about high valuations. On Thursday Naspers’ p:e was 109‚ meaning it will have to deliver present high earnings growth for the next 109 years to justify its market valuation.

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Old Mutual Investment group equities head Peter Linley said despite Naspers appearing expensive‚ its leading position in the emerging-markets media and e-commerce space provided significant earnings growth prospects.

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“This is underpinned by its portfolio of quality internet and pay-TV assets‚” he said.

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While much of the JSE looks overextended‚ selected consumer shares such as Mr Price are looking particularly pricey‚ despite excellent underlying fundamentals. These also include shares such as Tiger Brands and Shoprite.

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“Despite falling back from recent highs‚ consumer stocks are not yet fully reflecting the recent deterioration in macro conditions‚” Mr Linley said.

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In early morning trade diversified global media group Naspers rocketed to a record high of R1,857.63, before closing 5.31% up at R1,809.20, bettering its previous closing high of R1,770 reached on Wednesday.

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Analysts said demand for Naspers was high after its Chinese Tencent investment, of which Naspers owns about 34%, reported net income growth of 51% in the quarter to end December. Revenue growth increased 24%, its lowest in seven years.

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Sasol lifted for the third consecutive day, closing above R400 again despite Brent crude losing another $1.60 per barrel to $54.25 on the day. Sasol closed 4.23% higher at R408.17.

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Glencore gained 2.31% to R51.86 and Anglo American was 2.01% up at R190.50.

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Coal producer Exxaro gained 6.69% to R102.80.

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Among gold shares Gold Fields added 6.68% to R52.54 and AngloGold Ashanti was 6.26% firmer at R116.50.

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Lonmin led gainers among platinums, lifting 1.93% to R22.70. Impala Platinum was 1.61% higher at R62.60.

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Retailer Mr Price, trading at a p:e of 32, shed 1.22% to R253.50 and Shoprite closed 3.61% lower at R156.15. Food producer Tiger Brands was down 4.08% to R309.35.

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Investment group Anchor Group, trading at a p:e ratio of 50, added another 4.94% to R11.69 after reporting earnings growth of 300% on Wednesday.

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U.S. stocks were mostly lower on Thursday, continuing a recent bout of volatility as the dollar resumed its upward trend while the euro fell sharply.

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Thursday’s activity represented a retreat from the previous session’s heavy move into riskier assets such as stocks and oil brought on by comments from the Federal Reserve, which struck a more dovish tone than investors had anticipated.

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The dollar on Thursday rebounded from its biggest one-day fall against the euro and sterling in six years. The euro fell more than 2 percent on the day, continuing a downward slope that has seen the currency tumble more than 20 percent against the dollar since mid-2014.

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The U.S. central bank on Wednesday indicated it preferred a more gradual path to normalizing benchmark interest rates, slashing rate projections over the next few years and lowering its outlook on the U.S. economy.

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Omar Aguilar, chief investment officer of equities for Charles Schwab Investment Management in San Francisco, said the reaction to the comments was “not the kind of market that’s going to prevail, so it makes sense that pretty much everything we’re seeing today is just a reversal of yesterday’s move.”

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Over the longer term, he added, “I expect the dollar to remain strong and commodity prices will continue to be weak.”

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The U.S. dollar index .DXY, which measures the greenback against a basket of major currencies, rose 0.8 percent. The dollar rose 0.71 percent to 120.94 yen JPY=

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The euro EUR= fell 2.1 percent to $1.0645, extending its year-to-date decline to 12 percent. Further weakness could come with the European Central Bank just starting its bond-buying program and Greek debt negotiations still unresolved; Aguilar said the odds were “pretty high” that the currency would fall under parity with the dollar.

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The Dow Jones industrial average .DJI fell 103.78 points, or 0.57 percent, to 17,972.41, the S&P 500 .SPX lost 9.96 points, or 0.47 percent, to 2,089.54 and the Nasdaq Composite.IXIC added 7.79 points, or 0.16 percent, to 4,990.62.

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The Nasdaq was supported by strength in large-cap biotech stocks. Regeneron Pharma (REGN.O) rose 2.5 percent to $483.90 while Biogen Idec (BIIB.O) rose 2.4 percent to $438.35.

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In Europe, the FTSEurofirst 300 .FTEU3 index of top regional shares closed 0.46 percent higher at its highest since 2007.

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MSCI’s all-country world index .MIWD00000PUS, a measure of equity performance in 46 countries, was flat on the day, paring earlier gains of nearly 0.9 percent.

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Benchmark 10-year U.S. Treasury yields edged lower after the Fed cut its inflation outlook for 2015 following its latest two-day policy meeting.

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Ten-year Treasury notes US10YT=RR were last down 9/32 in price to yield 1.9807 percent.

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Brent crude oil fell back towards $54 a barrel after Kuwait said the Organization of Petroleum Exporting Countries had no choice but to keep production steady, refocusing the market on global oversupply.

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Brent for May delivery LCOc1 fell 3.3 percent to $54.08 a barrel. U.S. crude for April delivery CLc1 fell 3.3 percent to $43.19. Both had rallied sharply on Wednesday following the Fed’s comments, with Brent up nearly 4.5 percent.

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Gold XAU= rose 0.1 percent on the day while silver XAG= jumped 1.4 percent and copper CMCU3 climbed 3.2 percent.