JSE drops as oil supply fears weigh on sentiment
The US and China are expected to resume trade talks this week before engaging in high-level negotiations in October
The JSE was lower on Tuesday, in line with most global markets as investors fretted about the effects of drone attack on Saudi oil facilities on global supply.
An attack on Saudi Arabia's state-owned oil facilities at the weekend led oil prices to jump 20% in intraday trade on Monday. Oil prices have started to stabilise on Tuesday, while traders worry about the effect that supply disruptions will have on prices after the attack more than halved the country's production capacity.
“The supply shortage in Saudi Arabia should keep oil prices sustained above the pre-attack levels for the weeks to come. We could see a floor building near $60 in WTI crude and near $65 in Brent,” London Capital Group senior market analyst Ipek Ozkardeskaya said.
“Meanwhile, the expectation that the trade talks between the US and China could lead to a temporary agreement should give an additional boost to energy prices,” Ozkardeskaya said.
The US and China are expected to resume trade talks this week before engaging in high-level negotiations in October.
Earlier, the Shanghai Composite fell 1.74%, Hong Kong's Hang Seng 1.23% and Japan's Nikkei 225 was flat.
At 11.15am, the JSE all share lost 1.1% to 57,220.10 points and the top 40 lost 1.18%. Banks dropped 3.37% and gold miners were up 2.93%.
Blue Label Telecoms was down 0.35% to R2.87. The JSE said on Tuesday that the company was facing suspension for failing to release its financial results.
Sappi dropped 5.31% to R44.60 after the company fell out of the JSE Top 40 index on Monday due to the listing of Naspers subsidiary Prosus.
Comair was up 2.9% to R3.55. The company said on Tuesday that it expects its headline earnings per share to increase 184% to 197.4c in year to end-June.