Shares still under geopolitical influence

LAST week global geopolitical factors overshadowed fundamental factors on share and capital markets.

The continuous tension between the US and North Korea still made investors jittery.

The strained relations between President Trump’s administration and his chief strategist Steve Bannon before and after the Charlottesville disaster also brought nervousness among members.

The terrorist attack in Barcelona on Thursday also seemed to take a share in the week’s volatile market movements. Investors, therefore, preferred to move to more safe haven assets and the gold price improved sharply by the end of the week as most share markets in Europe, Japan, the US and China were sold off.

Bullion price rose substantially on Friday, trading above $1 292 (R25 450) an ounce as prices for platinum, palladium, and silver also gained as investors fled out of shares.

In the US, the Dow Jones industrial average index lost more than 1 percent over the week, while the Nikkei in Japan contracted 1.3 percent since the previous Friday.

European stocks, however, seemed to be popular as the Dax in Germany increased 1.2 percent last week.

Locally, although Moody’s has indicated that it will not change its outlook for South Africa’s credit rating for now, it emphasises that it still remains negative on the country’s economic growth prospects.

Also in view of the global political turmoil, share prices on the JSE were volatile last week. The all share index, after a good run last Wednesday, gave up some gains on Thursday and Friday. The index, however, ended the week 150 points, or 0.3 percent higher on 55 30423 points. The index is now 9.2 percent up since the beginning of the year.

Over the week, the industrial index rose 0.8 percent, up 11.5 percent for the year to date. The financials index traded just 0.03 percent higher.

Resources, despite a sharp increase in commodity prices in dollar terms, stayed under pressure as the index dropped by almost 1 percent last week. The listed property index gained 0.3 percent.

The rand recovered strongly last week. On Friday, just after the close of the JSE, it traded at R13.20 to the dollar, 27c, or 1.8 percent, stronger than a week ago.