MARKET WRAP: Bearish global sentiment weighs on JSE
Concern about global growth prospects puts pressure on most equity markets, although local miners are positive for the day
The JSE closed lower on Tuesday, reacting to a 2% slide in the Dow on Monday, amid investor jitters regarding slowing global growth.
US markets were sharply lower on Monday, but rebounded a little on Tuesday, helping the JSE pare earlier losses. Miners fared well, despite a slightly stronger rand, as the oil price came under pressure.
The all share fell 0.63% to 51,237.1 points and the top 40 0.66%. Industrials fell 0.68%, banks lost 1.99%, food and drug retailers 0.45% and financials 1.37%. Platinums added 2.07% and gold miners 2.01%.
Disappointing recent global economic data has underscored the costs of the US-China trade war, raising concerns of a synchronised international slowdown. A Bank of America Merrill Lynch poll found that 53% of investors expect an economic slowdown in 2019, the worst outlook for the global economy since October 2008.
“Investors are close to extreme bearishness,” said the bank’s chief investment strategist Michael Hartnett. “All eyes are on the Fed this week, and a dovish message could equal a bear market bounce.”
The US Federal Reserve is scheduled to announce its latest stance on monetary policy after South African markets close on Thursday, with the bank widely expected to raise interest rates 25 basis points, the fourth increase in 2018. The Fed’s future guidance will be closely watched, amid fears of an economic slowdown, and recent US data showing moderating price pressure in that country.
Pressure on UK Prime Minister Theresa May is also expected to weigh on sentiment this week, with May facing opposition after delaying a vote on her draft Brexit deal until January. However, she has managed to fend off a no-confidence vote from within her own party.
The oil price was also in focus, under pressure after clear signs of rising production in the US. Oil remains below $60 a barrel, despite oil-cartel Opec, along with Russia, agreeing on production cuts earlier in December.
Sasol slumped 4.83% to R407.91.
Rand hedge AB InBev fell 2.03% to R998, British American Tobacco 2.13% to R470.91, and Richemont 1.75% to R91.37.
Naspers firmed 0.19% to R2,823.52. From Thursday, Naspers will have a secondary listing on the A2X exchange.
Sibanye-Stillwater fell 3.69% to R9.91, while Anglogold Ashanti gained 3.03% to R175.99.
Telkom rose 5.08% to R63.73.
TFG gave up 2.6% to R159.41.
Shortly after the JSE closed, the Dow had rebounded 1.3% to 23,900.78 points, while in Europe, the FTSE 100 had fallen 0.4% and the CAC 40 0.15%, while the DAX 30 rose 0.5%.
At the same time, gold was up 0.12% at $1,247.24 an ounce, while platinum had fallen 0.3% to $790.69. Brent crude was 0.26% lower at $58.53 a barrel.