Stocks follow weaker US and European markets

Selling was broad-based, ranging from resources to banks with industrials and financials also retreating

THE JSE kicked off the second month of the second quarter of this year on a negative note, ending the day sharply lower on weaker US and European markets.

Analysts said sentiment on global markets was weak as investors took money off the table on softer Chinese data and the decisions last week by the European Central Bank and the Bank of Japan to keep rates unchanged.

The relatively weak Chinese manufacturing data provided a catalyst for the sell-off on global markets. The Caixin manufacturing purchasing managers index dipped to 49.4 last month from 49.7 in March.

Selling on the JSE was broad-based, ranging from resources to banks with industrials and financials also retreating. Gold shares were the exception in early trade but also turned negative later.

The all share gained 1.35% last month and is 2.47% up on the year. At the close it was 1.97% lower at 51,912.10 points, with the blue-chip top 40 having lost 1.98%. Resources shed 4.84% and platinums retreated 4.02%. Banks were 3.48% lower and financials dropped 2.60%.

The Dow Jones industrial average was 0.94% weaker at the JSE’s close. The FTSE 100 had lost 0.74%, the Paris CAC 40 was down 1.36% and Germany’s Dax was 1.77% lower.

Among individual stocks on the JSE, Anglo American (AGL) plummeted 11.04% to R141 and BHP Billiton (BIL) shed 5.05% to R185.15. Sasol (SOL) gave up 5.67% at R438.05 on the lower oil price. Brent crude was 2.47% down at $44.74 a barrel soon after the JSE’s close.

Among rand hedges, SABMiller (SAB) gained 2.30% to R888.33 and British American Tobacco (BTI) lifted 1.47% to R884.39.

After gaining more than 3% in the early morning Gold Fields (GFI) closed 2.58% lower at R63.01. Transport and logistics group Imperial (IPL) was off 5.46% to R140.90.

Among banks, FirstRand (FSR) lost 3.93% to R43.95. Standard Bank (SBK) closed 3.28% weaker to R123.53.

The rand lost more than 2% against the dollar late yesterday, while the greenback strengthened as investors bought dollars after weak economic data from China. Chinese manufacturing activity last month contracted, weighing on global markets and commoditybased currencies, such as the rand.

The dollar initially traded weaker on the day after data on Monday showed US manufacturing activity declined last month.

The weaker manufacturing statistics were the latest in a string of worse-than-expected US economic reports, fuelling US and global economic growth concerns.

The rand traded weaker after recent solid firmer runs, but mostly weaker commodity prices in late trade weighed on the local currency. Stronger-than-expected local purchasing managers’ index statistics also failed to buoy the rand. At 5.51pm‚ the rand was at R14.5916/$ from R14.2712/$ at Monday’s close. It was at R16.8043/€ from R16.4622/€ previously.

Bonds were weaker in line with a falling rand after the local currency lost steam after recent firm rallies and as the dollar gained in late trade. At 5.52pm, the benchmark R186 bond was bid at 9.130% and offered at 9.125% from Friday’s close of 9.045%.

South African futures fell in line with losses on the JSE and global markets due to risk-off trade after recent good market runs.

At 5.53pm, the Dow Jones industrial average was down 1.18% at 17,679.30 points. At the same time, the local near-dated Alsi futures market was 2% weaker at 45,975 points. With Madeleine van Niekerk