JSE weakens as miners pull back

The JSE turned weaker just before the close while US treasury yields rose again over concern about an uptick in inflation. Resources performed worst on the day.

“The bond market is selling off again despite tremendous Covid-19 vaccine progress. The economic recovery is still fragile and rising yields could trigger illiquidity in the market and that could have spillover effects and a negative impact across other markets,” said Oanda senior market analyst Edward Moya.

Despite Wednesday’s losses, the local bourse is still up 3.31% so far this week as good news on vaccines and progress on US stimulus continued to drive positive global sentiment on Monday and Tuesday.

The JSE all share lost 0.27% to 68,326.79 points and the top 40 0.39%. Resources fell 1.86% and banks 0.17%. The SA property index gained 0.94%, industrials 0.64% and financials 0.2%.

BHP led the losses in the resources index, falling the most since September 2020, down 4.09% to R472.91, while Sasol lost 1.24% to R190.60. Northam Platinum fell 0.59% to R239 and Gold Fields 0.36% to R126.40.

Global markets were mixed for much of the day before turning positive in late trade, with many investors appearing unconcerned that stocks may have rallied too far.

“The noise continues in financial markets, which are wasting a lot of energy vacillating between global recovery hopes and asset bubble fears this week. The US bond tantrum has introduced some long overdue twoway price action into the nearly oneyear unidirectional buy-everything rally,” said Oanda senior market analyst Jeffrey Halley.

“That state of affairs is likely to continue as markets learn to live with the prospect of higher interest rates and steeper yield curves, driven by the higher input price side of the global recovery equation,” said Halley.

Earlier, the Shanghai Composite gained 1.95%, Hong Kong’s Hang Seng 2.7% and Japan’s Nikkei 225 0.51%.

At 7pm local time, the Dow Jones industrial average was 0.45% firmer at 31,477.58 points. In Europe, the FTSE 100 gained 0.93%, France’s CAC 40 0.35% and Germany’s DAX 30 0.29%.

At the same time, the rand had weakened 0.45% to R14.9932/$, 0.32% to R18.1041/€ and 0.57% to R20.9513/£.

The euro was flat at $1.2074.