Downed Malaysian airliner hits markets

SOUTH African share prices ended slightly lower on Friday as tension in the Middle East and Ukraine undermined demand for risky assets, adding to mounting worries about valuations.

Truworths headed the list of losers, tumbling 3.6% to R72 after it reported a slowdown in annual sales growth.

Overall, investors took their cue from falling overseas markets after a Malaysian airliner was downed near the Ukraine-Russia border and Israel stepped up a ground assault against Gaza militants.

Weighing on sentiment was concern about South African equities being overpriced after the main indices hit a chain of record highs.

“I think the case is very strong for a pullback before the end of the quarter because the third quarter is historically volatile and weak,” said Evan Giannakis, a trader at Imara SP Reid.

The JSE All Share index was down 0.18% at 51 695, and the bluechip Top 40 index fell by the same margin to 46 558.

Alexander Forbes Preference Share Investment (Afpref) bucked the downward trend on the bourse, rising 6% to R8.80. Afpref houses about 30% of soon-to-be-listed pension fund manager Alexander Forbes, which raised $347-million in an initial public offering on Friday.

Tsogo Sun gained 4.65% after a major shareholder, SABMiller, sold its $1-billion stake, a move that could spark a valuation rerating of the tightly held stock.

US stocks rebounded, and European markets recovered a bit, but the euro dipped below $1.35 for the first time since February after the Malaysian airliner was downed in eastern Ukraine.

MSCI’s 45-country all-country world index rose 0.27% while the pan-European FTSEurofirst 300 index was flat at 1 362.82 after being down earlier.

The Dow Jones industrial average rose 0.28% to 17 024.5. The S&P 500 gained 0.42% to 1 966.31, and the Nasdaq Composite added 0.76%, to 4 396.628.

“It seems counterintuitive, given the ruthlessness with which the market sold off yesterday [Thursday], but in the broader context the markets are generating a lot of attractive themes,” said Peter Kenny, chief market strategist at Clearpool Group in New York, citing a growing US economy and corporate earnings.

Russian markets took the heaviest hit. Dollar-traded stocks in Moscow were down another 1.75% to put their losses for the week at about 8%.

Brent crude oil climbed to around $108 a barrel, extending sharp gains on heightened geopolitical risk.

Spot gold had slipped 0.9% to $1 306.30/oz by 2.30pm GMT, while palladium fell 0.4% to $877.50/oz, spot platinum was down 0.3% at $1 488.00/oz and silver fell 1.2% to $20.77/oz. —