Trump jitters add to JSE mining woes

Concern over the timeline for US President Donald Trump’s economic growth plans and lower commodity prices led to the JSE on Wednesday reversing some of the strong gains it had made since last week.

Mining shares were sharply lower at one point, although they recovered towards the close. The resources-10 index ended 2.02% lower on the day.

The price of iron ore tumbled to $87.50 a tonne, its weakest level since early February. Copper prices also dropped 3% on Tuesday and a further 1.7% on Wednesday to the commodity’s lowest point in two weeks.

Doubts about the viability of the debt-ridden Chinese property market affected commodities. “Uncertainty about the Chinese growth outlook on global prospects remained a risk, especially for emerging market commodity producers,” said Futuregrowth Asset Management portfolio manager Wikus Furstenberg.

The Trump administration’s antiglobal-trade tirades were expected to add uncertainty to the mix, he said. Very few of the its promises of tax reform and fiscal expansionary policies have come to fruition so far.

The resulting uncertainty on Tuesday had the Dow Jones industrial average close 1.14% down at 20,688.01, the worst percentage drop so far in 2017. The Nikkei 225 shed 2.13% on Wednesday to its worst since the end of February.

Oil prices came under renewed pressure after huge increases in US inventories were reported. Higher Brent prices at $60 a barrel enticed dormant producers to enter the market, driving prices down.

“The global glut … plays into our long-held longer-term view of lower oil prices,” said analysts at Nedbank Corporate and Investment Banking.

In late trade on Wednesday, Brent crude was 1.45% lower at $50.17 a barrel.

Gold was the bright spot among commodities on Wednesday, gaining 0.38% to $1,249.20/oz. Spot gold is up 8.4% so far this year.

UNCERTAINTY ABOUT THE CHINESE GROWTH OUTLOOK ON GLOBAL PROSPECTS REMAINED A RISK