FTSE/JSE All Share Index edges higher as resource stocks gain

The FTSE/JSE All Share Index edged slightly higher on Friday, trading just above the 84 000 mark, largely supported by strong gains in resource-linked sectors. The standout performer of the day was Barloworld, which saw its shares surge by over 6% after announcing negotiations with a consortium of investors, including a unit of Saudi Arabia’s Zahid Group. However, despite these gains, the overall sentiment remained subdued, with traders focusing on US Federal Reserve (Fed) Chair Jerome Powell’s cautious comments on the outlook for policy easing. Domestically, attention turned to the scheduled review of South Africa’s sovereign credit rating by S&P Global, which could have significant implications for investor confidence. For the week, the JSE was poised to decline by approximately 1.30%.

In the US, Wall Street closed lower on Friday, with the S&P 500 falling 1.20%, the Dow Jones shedding 290 points, and the Nasdaq dropping 1.90%. The market's retreat came as traders reassessed their expectations for an interest rate cut by the Fed in December. Chair Powell had emphasised that there was no immediate need for a rate reduction, citing a robust economy, a strong labour market, and persistent inflationary pressures. This sentiment was reinforced by fresh economic data, including stronger-than-expected retail sales and a surprise rise in both export and import prices. Additionally, the NY Empire State Manufacturing Index reported a surprising surge in business activity. Despite some gains in the financial sector, tech stocks were the worst performers of the day.

In the United Kingdom, the FTSE 100 saw a decline on Friday, weighed down by disappointing economic data showing that the UK economy contracted unexpectedly in September. The economy grew just 0.10% in the third quarter, below market expectations, primarily due to a contraction in manufacturing output. AstraZeneca dropped by 2.60%, as investors reacted to President-elect Donald Trump’s nomination of Robert F. Kennedy Jr. to head the Department of Health and Human Services, a move that raised concerns within the pharmaceutical sector. Similarly, GSK saw its shares fall by 3.40%, adding to the negative sentiment. Global markets also faced pressure following Powell’s remarks, which dampened hopes for imminent rate cuts in both the US and Europe.

In the Eurozone, major bourses also ended the week in the red, with the STOXX 50 dropping 0.70% and the STOXX 600 falling 0.60%, after gains of over 1% the previous session. Investor sentiment turned more cautious following Powell’s comments, which weighed on expectations of near-term monetary easing. Additionally, growth figures for the UK were disappointing, with GDP expanding by a meagre 0.10% in Q3, further contributing to the risk-off mood across European markets.

Japan’s stock market performed better, with the Nikkei 225 Index rising 0.28% to close at 38 643, and the broader Topix Index gaining 0.39% to 2 712. Japanese equities managed to reverse a three-day decline, buoyed by solid GDP data, which showed a 0.30% year-on-year growth in Q3. This marked a welcome break from two consecutive quarters of contraction, driven by improving private consumption and government spending. The weakening yen also provided support to Japan’s export-driven industries, though investor caution remained as Powell’s comments on US economic strength suggested the Fed would take its time before lowering interest rates further.

In China, stocks struggled, with the Shanghai Composite falling 1.45% to 3 331, and the Shenzhen Component dropping 2.62% to 10 748. Mainland equities faced pressure from mixed economic data, which suggested that China’s stimulus measures had yet to yield the expected results. While retail sales in October exceeded expectations, signalling some resilience in consumer spending, industrial production grew more slowly than anticipated, highlighting ongoing challenges in the manufacturing sector.

In commodities, WTI crude oil futures retreated towards $68 per barrel on Friday, heading for a weekly loss after three consecutive weeks of gains. The decline was driven by concerns that the global oil market could swing into oversupply, especially if demand fails to keep pace with increasing production. Meanwhile, gold traded around $2 560 per ounce, heading for its worst weekly performance since June 2021. The precious metal’s appeal waned due to a strengthening US dollar and reduced expectations for Fed rate cuts, which diminished demand for non-interest-bearing assets like gold.