Carnage on JSE before US decision

All the major indices on the JSE fell on Tuesday, with industrials spared most of the carnage, as the market waited to see if the US would withdraw from its nuclear deal with Iran.

Currency markets once again gave the JSE its direction, with a weaker rand hurting banking and financial stocks, while a stronger dollar weighed on miners.

The local bourse spentmuch of the day lower, extending losses as US markets opened. US President Donald Trump was expected to announce his decision on Iran at 8pm local time. A withdrawal from the agreement, expected by many analysts, would put further pressure on the oil price.

Brent crude hovered below $76 a barrel, but any reimposition of sanctions by the US could prompt global oil supply shortages, analysts said.

The expectation of rising inflation in the US has recently buoyed the dollar, as markets gauge the prospect of faster monetary policy normalisation.

While there was risk for further rand weakness, interest rate differentials between emerging markets and developed countries remained attractive, said an analyst. Emerging market currencies could find support if the recent dollar strength was interrupted, while concern over the US’s twin deficits was also likely to resurface.

The all share closed 0.37% lower at 57,665.20 points and the top 40 dropped 0.29%. General retailers fell 2.72%, the platinum index 2.37%, food and drug retailers 1.39%, banks 1.07%, and the gold index 0.99%.

Kumba Iron Ore slid 4.42% to R270. Impala Platinum plummeted 7.56% to R19.80, after it reported production fell 4.5% in its fiscal third quarter.

Naspers rose 1.3% to R3,074.49, tracking gains in Tencent and amid further reports of the imminent sale of Flipkart to Walmart.

Rebosis Property Fund gained 3.13% to R8.25, after earlier reporting net property income growth of 6.8%.

At 5.40pm, the Dow was flat at 24,4370.70 points, while in Europe the DAX 30 had lost 0.23%, the CAC 40 0.19% and the FTSE 100 0.07%.

At the same time, gold had fallen 0.48% to $1,307.74/oz and platinum 0.11% to $908.72/oz. Brent crude had slumped 2.2% to $73.80.

The top 40 Alsi futures index fell 0.8% to 51,210 points. Contracts traded were 34,063, from Monday’s 10,940.