US trade tension blow to markets
The JSE closed weaker on Wednesday as risk-averse sentiment gripped global markets ahead of a likely escalation in trade tension.
The local market focus shifted to global issues following Tuesday’s GDP data which showed the South African economy was in recession, having contracted 0.7% in the second quarter from a revised 2.6% drop in the first.
Tensions over trade between the US and its partners put pressure on global markets in recent months. The public comment period for the US’s proposed new tariffs on more than $200bn in Chinese goods is due to end on Thursday, possibly paving the way for US President Donald Trump to implement the tariffs.
Negotiations between the US and its trade partners have been a source of anxiety for Wall Street, although this has been offset by strong corporate results and signs of a healthy domestic economy, Dow Jones reported.
The Dow was flat at the JSE’s close, with European markets rattled by the intensifying trade war. The FTSE 100 lost 1.15% and the DAX 30 1.12%.
Brent crude was 0.8% lower at $77.17 a barrel, while platinum rose 0.75% to $784.74/oz.
The all share closed 1.36% lower at 57,102.1 points and the Top 40 lost 1.66%. Banks fell 2.85%, general retailers 2.07%, industrials 1.75%, financials 1.53% and property 0.9%. Platinums rose 3.77% and the gold index 1.13%. Naspers fell 4.02% to R3,055.60.
Nedbank slumped 5.01% to R255.04 and First-Rand shed 3.33% to R64.82. The former was, however, trading ex-dividend.
MMI Holdings fell 2.49% to R16.85 after annual diluted core headline earnings fell 12% to R2.8bn.
The rand was at R15.4219 to the dollar from R15.3483 having reached a low of R15.697 during the day.
Local bond yields spiked, in line with the falling rand, but analysts remain wary of calling present levels a good buying opportunity. The recession has raised concern about whether SA will be able to balance its fiscal books, as required by the major credit-ratings agencies. The contents of the medium-term budget policy statement, due on October 24, will be crucial for the country.
The benchmark R186 government bond was last bid at 9.24% from 9.22%.
The top 40 Alsi futures index dropped 1.28% to 50,780 points. The number of contracts traded was 26,182 from Tuesday’s 27,605.