MARKET WRAP: JSE drops to four-month low in broad-based losses

The JSE closed lower on Thursday, following Asian markets in reaching a four-month low. Global markets remain jittery as the trade tension between the US and China continues.  

Reuters reported that after temporarily lifting the ban on Huawei, the Trump administration might also impose Huawei-like sanctions on Chinese video surveillance firm Hikvision over China’s treatment of Uighur Muslims. China has since accused the US of “bullying”, and the country’s commerce ministry spokesperson Gao Feng said China will protect the legal interests of its businesses.

The Shanghai Composite fell 1.36% earlier, the Hong Kong Hang Seng 1.58%, and the Japanese Nikkei 0.62%.

The all share fell 1.89% to 54,185 points. and the top 40 by 2%, most indices closed lower with banks and financials incurring the most losses at 2.55% and 2.57%, respectively. 

Nedbank fell 3.51% to R248.63, Absa 2.98% to R161.24, Standard Bank 2.44% to R190.98, and FirstRand 2.18% to R64.21. 

Discovery closed 4.56% lower at R134.28, Sanlam 3.21% at R71.75, and MMI 3.77% at R17.60. 

Miners did not fared well, falling 0.51% on the back of a stronger dollar supported by better-than-expected US manufacturing purchasing managers index (PMI) and jobless claims figures. A sharp dip in the oil price also weighed on diversified miners.

Glencore fell 2.18% to R47.57, BHP 0.72% to R322.81, and Anglo American 0.49% to R347.59.

Naspers fell 2.4% to R3,126.00 as the Hong Kong listed Tencent  fell 3.83% earlier. 

Brait slumped 12.51% to R20.43 after the company reported that its net asset value per share declined between 23.4% and 27% to between R40.75 and R42.75 for the year ended-March.

Massmart fell 13.14% to R67.75 after the retailer said headline earnings and headline earnings per share (HEPS) may be about 50% lower in the six months to end-June compared to the same period in 2018. 

Sasol fell 5.79% to R353.30 continuing Wednesday’s losses after the company said its chemicals project in the US could cost as much as $1.1bn more than it expected three months ago.

The rand weakened 0.67% to R14.4717/$ after the Reserve Bank said the interest rate will remain unchanged at 6.75% and that a 25 basis point cut in the repo rate by the end of the first quarter of 2020 has been penciled in. The local currency weakened  0.71% to R16.1435/€ and 0.8% to R18.3464/£. The euro was flat at $1.1155 as Europe heads to the polls for the bloc’s parliamentary elections.

Gold gained 1.01% to $1,286.21/oz and platinum dropped 0.23% to $802.23. Brent crude dropped 4.17% to $67.86 a barrel amid a rise in US inventories and the escalating trade tensions. 

In the next few days, all eyes will be on domestic political activity as President Cyril Ramaphosa will appoint his Cabinet. This will be closely watched by the market, as some analysts maintain that a strong Cabinet will be able to help Ramaphosa implement his economic reform agenda and fix troubled state-owned entities. 

mjoo@businesslive.co.za