Fed rate hike fears weigh on JSE

The JSE started the week on a negative note as global risk-off sentiment, due to geopolitical tension over North Korea and hawkish talk from US Federal Reserve officials, kept the domestic market under pressure.

Banks, retailers and industrials ended the day sharply lower, but platinum and gold stocks gained as the rand weakened in late trade.

Political issues remained in the spotlight, with the government denying it intends using Public Investment Corporation (PIC) funds to bail out South African Airways (SAA).

An apparent united front between PIC CEO Dan Matjila and Deputy Finance Minister Sfiso Buthelezi, at a media conference, failed to support market confidence. Treasury directorgeneral Dondo Mogajane confirmed that SAA had approached the PIC on two occasions: in the first instance, for a R6bn loan in May; and the second, when the Treasury had asked it to consider buying its Telkom stake to cover SAA’s funding gap.

Globally, safe-haven trade on war talk from North Korea abated somewhat, with the gold price weakening and US bond yields rising. The market was awaiting Fed chair Janet Yellen’s speech later in the evening, which may indicate further guidance on an interest-rate increase in December.

The JSE all share lost 1.38%, to 55,070.4 points and the top 40, 1.5%. Banks fell 2.13%, industrials 1.56%, food and drug retailers 1.75% and financials 1.4%. The platinum index added 0.96%, and gold miners, 0.86%.

Naspers closed 3.19% lower at R2,867.59, its sharpest one-day drop in three months. Standard Bank shed 3.03%, to R157.72 and Barclays Africa 1.95%, to R136.87.

The rand was weaker in late trade after the dollar gained on the euro ahead of Yellen’s speech. The rand was last at R13.3884/$, from R13.3282/$. The euro was at $1.1772, from $1.1849.

Bond yields were higher, with the R186 last bid at 8.54%, from 8.44%.

The top-40 Alsi futures index lost 1.74%, to 49,521 points. The number of contracts traded was 37‚496, from Friday’s 28,805.