JSE. Picture: MICHAEL ETTERSHANK
JSE. Picture: MICHAEL ETTERSHANK

The JSE closed weaker on Tuesday as global risk-off sentiment drove equity markets lower after rising US bond yields raised the sceptre of a more aggressive tightening of US monetary policy.

The platinum index and resources rose towards the close, but banks, retailers and property stocks fell sharply.

Naspers closed nearly 4% lower after Tencent lost ground in Hong Kong trade ahead of expected weaker quarterly numbers, due out on Wednesday.

The Dow was 0.75% lower at the JSE’s close, while European markets rose on a weaker euro.

Equities were sold off following a sharp rise in the US 10-year bond yield to more than 3.06% on upbeat US retail sales data, released on the day. The market is now pricing in four interest-rate increases from the US Federal Reserve this year from a previously predicted three.

The all share closed 1.23% lower at 57,891.80 points and the top 40 lost 1.28%. Banks lost 4.5%, general retailers 3.21%, the gold index 2.37%, financials 2.34%, and property 2.03%. Resources rose 1.72% and the platinum index 1.5%.

FirstRand slumped 4.55% to R63, Standard Bank 4.84% to R206.88, and Nedbank 4.12% to R294.82.

Steinhoff fell 4.4% to a new low of R1.52.

Naspers closed 3.94% lower at R3,100.

The rand had its worst intra-day retreat since October last year, falling 2.5% against the dollar to R12.6504 at one point, before firming to R12.5875 by the JSE’s close. The rand’s weakness against the dollar came amid a softer euro to the dollar, despite hawkish comments by a European Central Bank (ECB) policy maker overnight.

Among the rand’s emerging-market peers, the Turkish lira was under the most pressure earlier, although the rand outpaced that currency’s losses shortly after the release of US retail sales data. Turkish President Recep Tayyip Erdogan said he wanted to tighten his grip on Turkish monetary policy.

Local bonds lost ground on the softer rand with the R186 bid at 8.49% from 8.325%. The US 10-year bond was last seen at 3.0566% from 2.9987%. Yields on European bonds were also somewhat higher, following in the footsteps of the US market.

"Higher US treasuries generally don’t bode well for emerging markets," said TreasuryOne dealer Gerard van der Westhuizen.

The top 40 Alsi futures index lost 1.17% to 51,735 points. The number of contracts traded was 21,930 from Monday’s 13,039.

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