People walk near the reception at the Johannesburg Stock Exchange (JSE) in Sandton, Johannesburg. Picture: SIPHIWE SIBEKO/REUTERS
People walk near the reception at the Johannesburg Stock Exchange (JSE) in Sandton, Johannesburg. Picture: SIPHIWE SIBEKO/REUTERS

The JSE closed lower on Thursday as the stronger dollar continued to hammer sentiment towards emerging markets.

Volumes surged towards the close, hitting R22bn, mostly linked to a sell-off in Naspers shares.

The euro fell through $1.18 on the day, reaching a five-month low for the bloc’s currency, following reports from Italy that a coalition agreement between populist parties Five Star Movement and the League revealed plans to defy EU rules. This included the cancelation of €250bn of Italian bonds, bought by the European Central Bank (ECB).

Italian stocks plunged and bond yields shot up by more than 15 basis points on the news.

A new round of China-US trade talks was launched on Thursday in continued efforts to avert a trade war. "It is still difficult to predict how the negotiations will end," said FXTM analyst Jameel Ahmad.

After a flat start, the Dow picked up some momentum in choppy trade. European markets ended the day higher, on the weaker euro.

The all share closed 0.75% lower at 58,184.30 points and the top 40 lost 0.83%. Banks dropped 3.18%, food and drug retailers 2.01%, financials 1.65%, general retailers 1.1%, and industrials 1%.

Standard Bank slumped 3.66% to R203.02.

Naspers closed 1.72% lower at R3,203.99.

MTN lost 2.41% to R118.07.

The rand was at R12.5783 to the dollar from R12.4428 and the euro was at $1.1793 from $1.1807.

The rand lost ground for most of the day, but held up relatively well considering that the dollar has gained more than 2% against the euro so far this month, its best monthly performance since February 2017.

Geopolitical tension and a volatile Turkish lira added to the mix, which weighed on sentiment towards emerging markets. Over the past few sessions, the Turkish lira has hit a series of record lows against the dollar, despite recent increases in interest rates in the country.

Local bonds were relatively steady, with the R186 bid at 8.51% from 8.455%. The US 10-year bond was at 3.1094% from 3.0973%.

After crossing 3% earlier this week, some analysts reckon the yield on the benchmark US 10-year could touch 3.2% in the short term. It rose to a seven-year high of 3.093% on Wednesday, and reached 3.11% in intra-day trade on Thursday, Dow Jones Newswires said.

The top 40 Alsi futures index fell 0.62% to 52,090 points. The number of contracts traded was 14,950 from Wednesday’s 25,127.