Stocks fall for ninth day as US economy shrinks

SOUTH African stocks fell for a ninth successive session on Friday, tracking global markets after data showed the US economy contracted in the first quarter.

Losses were across the board. Retailers were hard-hit, with Woolworths losing 3.82% to R95.40 and Mr Price off 2.54% to R241.52.

David Shapiro, an analyst at Sasfin Holdings, said the US GDP numbers had driven domestic sentiment on Friday.

“The world’s biggest economy is slowing down,” he said.

The US government slashed its estimate to show GDP shrinking at a 0.7% annual rate instead of the 0.2% growth pace it had estimated last month.

Local numbers have also been poor. South African Revenue Service data showed a trade deficit for April, the latest sign of a struggling economy that expanded by only 1.3% in the first quarter.

The benchmark Top40 index closed 1.13% lower at 46 285, while the broader All Share index lost 1.02% to 52 270.

On the upside, shares in Kumba Iron Ore added 2.77% to R155 as the spot price of the key steel-making ingredient held near a threemonth high.

Iron ore was set to end May with its biggest monthly gain in almost two years.

Trading volume on the JSE was brisk, with 260 million shares changing hands, well above last year’s daily average of 183 million.

Global equity markets and bond yields fell, weighed down by the US data and by conflicting signals from Greece’s debt talks.

European shares also fell on data showing private loan growth in the eurozone stalled in April, while the report on US GDP also indicated that after-tax corporate profits declined 8.7% in the first quarter.

Conflicting reports that Athens was close to clinching a reforms-for-cash deal with its creditors pushed German 10-year bond yields down three basis points to 0.50%. US debt yields also fell, with the 30-year US treasury falling to its lowest in three-and-a-half weeks, at 2.84%, while benchmark US 10-year yields also hit a threeand-a-half-week low at 2.097%.

MSCI’s all-country world index of the stock performance in 46 countries fell 0.49%. The pan-European FTSEurofirst 300 had shed 1.25% to 1 595.10 points by 14.07 GMT.

Wall Street was lower in morning trading after the GDP data and as corporate profits declined the most in a year.

The Dow Jones industrial average fell 0.73% to 17 993.49. The S&P 500 slid 0.61% to 2 107.84, and the Nasdaq Composite lost 0.58% to 5 068.26.

North Sea Brent crude was up $2.15 at $64.73 a barrel, and US crude rose $1.75 to $59.43 a barrel.

Spot gold was up 0.4% to $1 192.76/oz.—