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Picture: 123RF/DANIIL PESHKOV
Picture: 123RF/DANIIL PESHKOV

The JSE tracked weaker global markets on Tuesday as the outlook for the Chinese economy and disappointing company earnings from the US weighed on sentiment

Beijing has stepped up quarantine efforts after recording a record number of Covid-19 cases, fuelling fears that another widespread lockdown — and its effect on an already reeling global economy — is in the offing.

This comes after Bloomberg Economics slashed its forecast for China’s GDP growth to 2% last week as a result of the lockdown, and predicted that the US economy may grow faster than China’s for the first time since 1976. 

Meanwhile, shares in Snap plummeted almost 30% in pre-market trading after the US camera and social media company cut its earnings forecast, citing continuing supply chain disruptions, rising input costs, and geopolitical risks stemming from the war in Ukraine. 

The warning hit other social media and technology companies, dragging down Meta Platforms, Pinterest, Twitter and Alphabet, as it becomes clear that most companies won’t be able avoid the troubling macro-economic backdrop, Bloomberg reported.

“These wild swings from one day to the next have become the norm as investors try to pick the bottom in the markets only to be dealt another blow from one negative headline or another,” said Oanda senior market analyst Craig Erlam.

“Pessimistic Chinese growth forecasts and a profit warning from Snap appear to have been behind the latest tumble, although there are so many headlines pouring out, you could probably pick another half-a-dozen reasons to explain the selling,” Erlam added. “Ultimately it comes down to the fact that the level of economic uncertainty is immense and while recessions are not the base case, they are a very realistic prospect.”

Industrials index dragged the JSE lower with heavyweights Barloworld, Naspers and Prosus leading the losses, slumping 9.38% to R88.21, 6.73% to R1,460.18, and 6.03% to R696.94, respectively.

The JSE all share weakened 0.99% to 67,690.72 points and the top 40 was down 0.99%.

At 6.43pm, the Dow Jones industrial average was 0.96% weaker at 31,573.22 points while the tech-heavy Nasdaq was down 3.08%. European shares were down between 0.39% and 1.8%, while Asian markets closed between 0.9% and 2.4% weaker.

At 6.20pm, the rand had strengthened 0.6% to R15.6487/$ and 0.99% to R19.6337/£, and 0.17% at R16.8079/€. The euro was 0.5% firmer at $1.0742.

Gold gained 0.84% to $1,869.13/oz and platinum 0.21% to $960.50. Brent crude was 0.19% firmer at $113.54 a barrel.

tsobol@businesslive.co.za

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