MARKET WRAP: JSE slips 1% with diversified miners faring worst

The JSE closed lower on Thursday, after mostly disappointing local corporate and economic news, as well as continued jitters about the US-China trade war.

Earlier, Germany’s IHS Markit manufacturing purchasing managers' index missed market expectations, with the reading pointing to the steepest contraction in activity in seven years.

The data comes a day before the European Central Bank's (ECB's) interest-rate announcement on Thursday, with policy makers widely expected to strike a dovish tone.

The all share fell 1.01% to 57,718.1 points and the top 40 1.12%. The resources index lost 2.29% and banks 1.51%. Platinum miners added 0.94%.

Global markets were briefly boosted earlier by news that US-China trade talks would resume next week, although this effect faded quickly, Oanda analyst Craig Erlam said in a note. “Any agreement is still likely to take some time and so investors remain reliant on the US Federal Reserve to support markets with rate cuts this year.”

Local data was also marginally downbeat, with consumer inflation, as measured by the annual change in the consumer price index (CPI), remaining unchanged at 4.5% in June from May. The Bloomberg consensus had been for a moderation to 4.4%.

Markets have priced in another 25 basis-point (bps) cut by the Reserve Bank by the end of the 2019, but the Bank has recently stressed that risks to the rand remain, including slowing growth globally and a widening fiscal deficit locally.

There was currently space for the Reserve Bank to cut rates by 100 bps over the next 12 months, should global conditions be favourable, PwC chief economist Lullu Krugel said, although the Bank’s caution means it would be likely to only cut by as much as 75 bps.

This would help with local economic activity and business confidence, Krugel said, adding that the Bank was right, however, in saying that SA’s economic difficulties were mostly structural and that monetary policy was not a solution for political issues.

Shortly after the JSE closed, gold had risen 0.45% to $1,423.81/oz while platinum had jumped 2.09% to $873.51. Brent crude was 0.22% higher at $64.36 a barrel.

The Dow was down 0.45% at 27,227.03 points, while in Europe, the FTSE 100 had fallen 0.6% and the CAC 40 0.12%. The DAX 30 was up 0.35%.

BHP slumped 4.27% to R338.84 and Anglo American 3.38% to R377.87.

Naspers gained 0.47% to R3,508.83, tracking an almost 2% rise in Hong Kong-listed subsidiary Tencent earlier. The Chinese media giant is partnering with the Pokemon Company to create a new Pokemon game.

Kumba Iron Ore fell 3.12% to R461.07, extending Tuesday's 2.93% fall, which came despite it saying that headline earnings per share surged 239% to R31.51 in the six months to end-June.

AVI fell 4.65% to R88.78. It said earlier that group revenue rose 1.2% in the year to end-June, although operating profit was lower.

Ellies plunged 16.67% to 10c. It said earlier that it expected to have swung into a loss in the year to end-April, citing among other factors, significant consulting and legal fees in dealing with some legacy litigation issues.

Trading ex-dividend, ISA Holdings plummeted 17.07% to R1.70.

gernetzkyk@businesslive.co.za