MARKET WRAP: JSE falls on resurgence in trade-war fears
The rand was fairly subdued against the dollar as US markets were closed for Thanksgiving, but is still more than 2% firmer for the month
The JSE closed in negative territory on Thursday, tracking global markets, amid concerns that new legislation by the US that supports pro-democracy protesters in Hong Kong could affect trade negotiations.
The bill, which was signed by US President Donald Trump on Wednesday, requires an annual review of the trading terms between the US and Hong Kong. China said it would take “firm countermeasures” against the new legislation, Reuters reported.
“In the bigger picture, though, one suspects this will be China going through the motions with Trump able to plead it wasn’t his bill. The president, in fact, had already said he had personally saved Hong Kong a couple of weeks ago. China needs a trade deal as badly as the US at the moment, and pragmatism will overcome pride,” said Oanda senior market analyst Jeffrey Halley.
Shortly after the JSE closed, the FTSE 100 was down 0.19%, France’s CAC 40 0.22% and Germany’s DAX 30 0.12%. Earlier, the Shanghai Composite fell 0.47%, Hong Kong’s Hang Seng 0.22%, and Japan’s Nikkei 225 0.12%.
The rand was fairly subdued against the dollar for most of Thursday as US markets were closed for Thanksgiving. The local currency is still more than 2% firmer so far for the month.
“The rand could see further strength to the end of the month and, indeed, through much of the next quarter on the usual seasonality of emerging-market currencies, which tend to strengthen over the northern hemisphere winter, as the sell-in-May-and-go-away effect reverses,” Investec chief economist Annabel Bishop said.
At 5.20pm, the rand was flat at R14.7469/$, R16.2268/€ and R19.0285/£. The euro was little changed at $1.1003.
The R2030 government bond was weaker with the yield rising six basis points to 9.23%. Bond yield move inversely to their prices.
Gold was flat at $1,455/oz while platinum was down 0.64% to $63.1. Brent crude was little changed at $63.10 a barrel.
Locally, the producer price index (PPI) slowed to 3% year-on-year in October from 4.1% the previous month. This is its slowest rate of increase since 2015, data from Statistics SA showed on Thursday.
Eskom said on Thursday that its after-tax profit more than doubled to R1.3bn in the six months to end-September. The debt-laden power utility said, however, it expects a full-year loss of R20bn.
The JSE all share fell 0.84% to 55,702.5 points and the top 40 0.88%. Banks fell 1.18% and industrials 1.19%.
Kaap Agri gained 7.1% to R30. It said on Thursday that its revenue increased 29.1% to R8.5bn in the year to end-September, thanks to a 10.6% increase in the number of transactions.
Tharisa dropped 2.52% to R14.33. The resources group said on Thursday that operating profit dropped 66.6% to $24.2m in the year to end-September.
Vodacom said on Thursday its CFO Till Streichert has resigned to pursue other opportunities. Streichert has been with the company since 2014. Vodacom’s share price fell 2.63% to R120.51.
Growthpoint said on Thursday that 46.9% of Capital & Regional shareholders had agreed to the sale of a controlling stake of the UK property company to Growthpoint. Capital & Regional’s share price gained 4.2% to R5.71 while Growthpoint was flat at R22.80.
Quantum Foods said on Thursday that operating profit fell by 48% to R245m in the year to end-September and headline earnings per share (HEPS) decreased 44% to 92.3c. The company said “limited economic growth put pressure on consumers and negatively impacted its ability to purchase eggs and chicken meat”. Its share price gained 2.05% to R3.99.