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Richemont takes centre stage on JSE

Johannesburg - Friday morning's trading activity on the JSE centred on Richemont [JSE:CFR] as investors started to take profits after the share moved steadily upwards over the past few days.

More than 6.4 million shares were traded by midday on Friday for more than R691m, twice the volume of any other stock, and the share price dropped 1.63% to R108.21.

That was enough to subdue the Industrial index on Friday morning which was 0.04% lower by midday, but the rest of the market was moderately higher.

The All-share index was just in the black and traded only 0.14% higher at 54 200 points. The Top 40-index was 0.18% stronger, still hovering around the support level of 48 000 at 48 003 points.

The Resource index gained 0.83% and the Gold index 0.49%, while the Financial index traded 0.4% higher.

Richemont announced a drop of 42% in headline earnings for the full year on Friday, but this news did not come as a surprise to the market as there had been enough announcements to prepare investors for the news.

In fact, the last trade warning was on Monday and the share price responded positively over the past four days. Even after Friday morning’s drop, the share price is still 4.52% stronger over the past seven days.

Richemont said the decrease in earnings was due to market-to-market losses on its cash holdings, which can be ascribed to the strengthening of the Swiss franc against the euro after the Swiss government decided to delink the value of the Swiss franc from the euro.

READ: Rupert positive despite Richemont challenges

Up until Friday morning investors preferred to concentrate on the positive aspects of the results, including the news that operating profit grew by 10% and sales of €10 410m were 4% higher than the previous year.

Friday morning’s action can therefore be ascribed to profit-taking after the solid gains of the past few weeks. Richemont’s share price is 11.1% higher over the past 30 days.

The Standard & Poor index reached new record levels on Wall Street on Thursday night, after bond yields started to fall back on assumptions that US interest rates would not rise as soon as the market had anticipated.

The improved mood on Wall Street however had a very limited impact on the JSE. The technical analysts of Imara SP Reid said in their daily Market Snapshot that the Top 40-index has remained virtually unchanged over the past ten days, representing the middle point of a wide trading range that has been in place since the middle of April.

Technical support is however available for the Top 40-index at just below 48 000 points, and if the index holds its ground above this level in the near future some upside momentum is likely to emerge.

Among the other heavyweights in the Industrial index, Naspers [JSE:NPN] gained 1.09% by Friday midday to R1 841.95. The share price opened at R1 860 after a strong run by the Hong Kong market, which gained 1.40% on Friday morning. Naspers owns 34.4% of Tencent, the Chinese internet giant listed in Hong Kong. Tencent was 1.28% higher.

Naspers is one of those shares which has drifted sideways over the past few weeks; it is still 1.03% lower over the past seven days and 3.09% over the past 30 days.

The Resources index, which dropped sharply earlier in the week on the back of a stronger dollar, continued the recovery that started on Thursday. Imara SP Reid said the losses were overdone. The index is currently trading on the 65-day moving average and if the dollar does not strengthen early next week, it might improve further.

Anglo American [JSE:AGL] traded 0.97% higher at R198.73, but Kumba [JSE:KIO] lost another 1.14% to R147.74. BHP Billiton [JSER:BIL] gained another 1.02% to R253.62 after sharp losses earlier this week, but the newcomer South32 traded 1.15% weaker at R21.50.

     
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Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
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Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
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Silver
24.87
+0.9%
Brent Crude
86.09
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Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
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Industrial 25
103,936
+0.6%
Financial 15
16,502
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