South African stocks fell on Friday for the second session in a row, led by companies such as pulp and paper company Sappi, which was waylaid by poor earnings.
Sappi’s shares dropped more than 6% to R41.25 after the company posted an 89% slide in third-quarter earnings, citing planned maintenance shutdowns, a mill upgrade and an unfavourably strong US dollar.
The overall market tone was set by US jobs data, which came near enough to expectations to bolster bets the Federal Reserve will raise rates for the first time in nearly a decade this year.
The data showed 215,000 jobs were added in July, slightly below a Reuters poll of 223,000 jobs, but the unemployment rate held at a seven-year low of 5.3% and there were signs that wages were beginning to pick up.
That is bad news for gold, seen as a haven against inflation, and other commodities more generally. Bullion’s spot price steadied on Friday but was on course for its seventh weekly loss and was trading near 5-1/2 year lows.
“If the jobs look good and the Fed is going to hike, it is good for the dollar and so bad for mining stocks in general,” said Christie Viljoen, an economist at NKC African Economics.
“And it is good for treasuries, so money will start going that way,” he said.
Sibanye Gold shed almost 7% to R14.47, making it the biggest decliner of the day, though momentum indicators suggest the stock is oversold.
Sentiment in the gold sector has been further dented by three unions’ rejection of the latest wage offer from bullion companies, setting the stage for protracted wrangling and potential strike action.
Not all of South Africa’s gold stocks were down. Harmony Gold added 4.3% in a move partly based on technical factors after its share also strayed into oversold territory recently.
The benchmark Top-40 index lost 1.06% to 46,432, while the wider All-share closed down 0.86% at 52,015.