JSE closes on new 2018 low

Business Day - - FRONT PAGE - Maarten Mit­tner Mar­kets Writer mit­tnerm@busi­nesslive.co.za

The JSE closed at its low­est level for 2018 on Tues­day, fall­ing more than 2.5%, as global mar­kets tum­bled fol­low­ing a re­port by the IMF, in which it low­ered its global fore­cast for eco­nomic growth for 2018. The fund said there was even an out­side chance of an­other fi­nan­cial cri­sis. Ar­gentina and Pak­istan had al­ready ap­proached it for bailouts, it said.

The JSE lost more than 2% on Wed­nes­day to close at its low­est level in 2018 as global risk-off sen­ti­ment ham­mered rand hedges and min­ers on global growth fears.

A num­ber of blue-chip stocks were par­tic­u­larly hard hit, in­clud­ing Naspers, Mondi, Old Mu­tual and BHP.

At its an­nual meet­ing in In­done­sia, the IMF said it ex­pected emerg­ing economies to re­sist re­cent mar­ket tur­bu­lence, but warned of an out­side chance of a cri­sis.

Ar­gentina’s econ­omy is ex­pected to con­tract while Pak­istan has also re­quested an IMF bailout, Dow Jones Newswires re­ported.

How­ever, in what the IMF said would be a “se­verely ad­verse” sce­nario, cap­i­tal flight could reach lev­els not seen since the 2008 cri­sis.

The all share closed 2.54% lower at 52,813.40 points, the low­est close for 2018, and the top 40 lost 2.8%.

In­dus­tri­als dropped 3.3%, re­sources 3%, food and drug re­tail­ers 1.87%, the gold in­dex 1.63% and banks 1.08%. Plat­inums edged 0.27% higher.

Naspers fell 6.47% to R2,656.98, its worst per­for­mance in 2018. Mondi slumped 7.15% to R350.31. Old Mu­tual ended 26.85% lower at R21.55, mostly on tech­ni­cal is­sues as the group un­bun­dled the ma­jor­ity of its share­hold­ing in Ned­bank.

BHP lost 3.24% to R306.76. Sa­sol dropped 1.48% to R540.66, while Brent crude fell 1.43% to $83.38 a bar­rel.

The Dow was 1.12% lower at the JSE’s close with Euro­pean mar­kets also sharply down on weaker Ital­ian bonds amid de­vel­op­ments around that coun­try’s bud­get. Po­lit­i­cal par­ties have in­di­cated that they could adopt looser fis­cal poli­cies in con­tra­ven­tion of EU guide­lines. Global mar­kets have been on edge since the US 10-year trea­sury yield rose above 3.2% last week.

In­vestors have also been eye­ing the po­ten­tial ef­fect of ris­ing bond yields on mar­ket sen­ti­ment, Dow Jones Newswires re­ported.

Higher yields make riskier as­sets such as stocks less at­trac­tive. US stocks have been sold off in four of the past five ses­sions as in­vestors fear in­ter­est-rate hikes in a low-in­fla­tion en­vi­ron­ment. The bench­mark R186 govern­ment bond was last bid at 9.225% from 9.23% and the US 10-year at 3.2289% from 3.2051%.

The rand was off its best lev­els of the day, fol­low­ing the gains it made on the ap­point­ment of Tito Mboweni as fi­nance min­is­ter.

After firm­ing to R14.5191 in in­tra­day trade, it was at R14.6873 against the dol­lar at the JSE’s close, de­spite the euro claw­ing back some lost ground to $1.1525 from $1.4893.

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