MARKET WRAP: JSE closes at six-month low on continued concern over trade
The rand rebounded on Thursday afternoon, strengthening more than 1%, providing a boost for local banking shares
The JSE closed lower on Thursday as some global markets struggled to recover from Wednesday’s sell-off after China vowed to retaliate against US President Donald Trump’s recent tariff threat.
On Thursday, China said it would take measures to respond to the 10% tariff imposition on $300bn worth of Chinese imports. The country’s foreign ministry later said, however, that China hopes to meet the US “half way” and for the two leaders to execute the agreements reached at the G20 summit in June.
Global equities were hit hard on Wednesday as investors rushed to the bond market, which saw yields for longer-term government bonds push below shorter-dated ones — that is, an inverted yield curve — which is interpreted as a warning that an economic slowdown is approaching.
The global sell-off was prompted by weaker-than-expected Chinese retail sales and industrial production, as well as a slowdown in Germany’s economy activity in the second quarter of the year.
The rand rebounded on Thursday afternoon after losing almost 2% on Wednesday. At 6.22pm, it had firmed 1.19% to R15.2353/$, 1.55% to R16.9113/€, and 0.74% to R18.4557/£. The euro had weakened 0.35% to $1.1102.
The benchmark government 10-year bond was stronger, with its yield falling three basis points, or 0.03 percentage points, to 8.43%. Bonds yields move inversely to bond prices.
Gold had gained 0.1% to $1,518/oz while platinum had fallen 0.81% to $839.26. Brent crude was down 1.41% to $58.22 a barrel.
The Dow was 0.40% higher at 25,571.22 points. In Europe, the FTSE 100 had fallen 1.13%, France’s CAC 40 0.27%, and Germany’s DAX 30 0.7%. Earlier, the Shanghai Composite rose 0.25% and Hong Kong’s Hang Seng 0.76%, while Japan’s Nikkei 225 was down 1.21%.
The JSE all share fell 0.35% to 53,840.90 points, its lowest level in six months, and the top 40 0.33%. The rand’s rebound, however, saw banks jump 3.55%, while resources fell 2.15%.
Standard Bank climbed 4.58% to R173.50, Absa 4.03% to R152.10, Nedbank 3.66% to R223.53, and FirstRand 2.85% to R56.61.
Among diversified miners, Glencore dropped 3.63% to R41.16, Anglo American 3.49% to R313.18, and BHP Group 1.54% to R326.46. Anglo was, however, trading ex-dividend.
Anglo American Platinum dropped 3.79% to R804.42. The miner said on Thursday that it expects headline earnings per share (HEPS) to be between R4.06 and R4.40 for the financial year ended June.
Gold Fields slumped 9.76% to R80.93 despite it declaring a dividend of 60c in the six months to end-June, on Thursday, from 20c previously.
RCL gained 0.64% to R10.97 despite saying on Thursday that it had written down its sugar unit by R761.9m. The share initially dropped more than 10% on the news, before recovering by the close.
Imperial Logistics gained 2.52% to R47.23, despite the company saying earlier it expects its HEPS to fall as much as 75% in the six-months to the end of June.
ARB Holdings said on Thursday that its operating profit fell 24% to R155.4m for the year to end-June. The company’s share price was unchanged at R4.20.