MARKET WRAP: JSE closes weaker on risk-off sentiment as trade fears grow
The JSE closed weaker on Wednesday as renewed fears over an escalating global trade war resulted in risk-off sentiment dominating markets.
Analysts said trade tension between the world’s two largest economies presented a significant threat to global economic growth and stability. The White House said it would assess a 10% tariff on a further $200bn worth of Chinese goods, deepening its dispute with Beijing, and sending a message to other trading partners that the US will not back away from trade fights.
Investors remained on the sidelines as European markets slumped after US President Donald Trump described the German economy as a "captive of Russia, and totally controlled by Russia" because of a gas pipeline linking Germany with Russia.
Trump is on a visit to Europe and will meet Russian leader Vladimir Putin on Friday.
Trump’s view on Germany was firmly rebutted by Chancellor Angela Merkel, who said Germany was "now independent" and that it would make its own decisions.
Although a trade war would be negative for the exporting economy of the eurozone, so far the US had focused more on Chinese goods rather than European ones, although US tariffs on cars remained a threat, Dow Jones Newswires reported.
The all share closed 1.37% lower at 57,231 points and the top 40 dropped 1.45%. Resources dropped 1.67%, financials 1.35%, general retailers 1.29%, industrials 1.28%, food and drug retailers 1.25%, banks 1.2% and property 0.58%.
Miners were dragged down by a sharply lower oil price with Brent crude dropping 2.5% to $76.95 a barrel, after Libya indicated it would resume oil exports.
Anglo American dropped 3% to R296.10 and Sasol 0.33% to R517.96.
Rebranded from Barclays Africa earlier in the day, Absa shed 2% to R162.
Naspers closed 1.6% lower at R3,440.
The rand remained on the back foot against the dollar, trading at R13.45, from R13.3349 and at R17.8329 to the pound from R17.669. The pound was at $1.3244 from $1.3271. Two British ministers resigned earlier in the week after UK Prime Minister Theresa May unveiled a "softer" Brexit plan.
The euro was at $1.1721 from $1.1744. ING analysts said the euro should stay at about $1.17 over the short term, with limited effect from the latest announcement by the US on Chinese imports.
The top 40 Alsi futures index dropped 1.98% to 50,980 points. The number of contracts traded was 15,797 from Tuesday’s 21,050.