The Johannesburg Stock Exchange’s top 40 index rose 1.4% to 63,263 points on Friday and the broader all-share index rose 1.1% to 69,921 points. Companies that typically benefit from a stronger rand posted the biggest gains, while mining companies fell back after two days of gains as the rally in gold prices faded.
The rand initially gained on Friday, building on the previous day’s gains after the government pledged to cut the budget deficit and reduce debt in its medium-term budget plan. However, at the close of trading, the rand was trading around R15.35 against the dollar, 0.4% weaker.
Gold prices slipped this morning, falling back from their five-month high reached in the previous session, as a firmer dollar weakened gold’s appeal. Meanwhile, crude oil prices softened this morning as they were pressured by expectations of higher supply and weaker demand. Both crude oil markets have fallen over the past three weeks, driven by a stronger dollar and speculation that speculation that President Joe Biden’s administration may release oil from the U.S. Strategic Petroleum Reserve to cool prices.
Richemont cedes control of Yoox Net-A-Porter through Farfetch deal
Richemont is making a U-turn on building an e-commerce platform for luxury goods as it prepares to relinquish control of Yoox Net-A-Porter through a deal with web shopping specialist Farfetch. The move follows reports that activist investor Dan Loeb has bought a stake in the Cartier owner, which has been struggling to get its online business back on track since taking full control three years ago.
Richemont also announced that operating profit rose to 1.95 billion euros ($2.2 billion) in the six months to September. Analysts had expected 1.49 billion euros. “The post-Covid world has yet to unfold. Volatility is likely to persist in the second half of the year, including in terms of inflation and geopolitical tensions,” Rowley said in the statement.
Telkom burns cash as warning signs pile up
Telkom has burnt almost R1 billion in cash over the past six months. The company reported negative free cash flow of R839 million for the six months to the end of September, down R1.05 billion from positive R11 million in the first half of last year. The company attributed this to “an increase in capital expenditure of R1.1 billion during the period”. This was caused by the Covid-19 closure in the first half of the last financial year.
This meant the operator made higher-than-usual capital expenditure in the second half, peaking in the fourth quarter. The operator settled some of its fourth quarter capital expenditure (which amounted to R3.3 billion) in the first half of this year, making a clean comparison impossible. The company declined to give the actual figure, saying only that “in line with industry practice, our general payment terms for suppliers are 90 days”.