JSE and rand fall as big global sell-off continues

The JSE tracked weaker global markets on Monday, falling more than 2% at one stage as concern about a potential recession in the US persisted, fuelling a widespread sell-off.

Among global markets, the Nikkei was the hardest hit, with Reuters reporting that Japanese shares at one point exceeded their 1987 “Black Monday” loss. 

Japan’s benchmark Nikkei average closed 12.4% lower at 31,458.42, its largest one-day fall since October 1987. Shares in Australia, Hong Kong and China also fell heavily. European shares were also lower. 

The JSE was not immune to the global sell off and at 10.20am, the all share index was 1.82% lower, while the top 40 had fallen 1.87%. Resources stocks shed 2.5%. 

Platinum shares were badly hit as the precious metal lost more than 3% on international commodity markets. Impala Platinum was down 5.1% and Northam shed 4.06%.

Economic data released last week after the US federal open market committee left interest rates unchanged reignited concern about a potential US recession and the possibility that the US Fed may have left it too long to cut rates.

Key indicators pointed to a slowdown: initial jobless claims surged to their highest level since August 2023, while the US ISM manufacturing index fell to 46.8%, a reading below expectations and a signal of economic contraction.

Recession concerns were further sparked by a disappointing jobs report on Friday, which showed nonfarm payrolls for July came in way weaker than expected, while the unemployment rate rose to the highest level since October 2021.

Fed chair Jerome Powell signalled the potential for an interest rate cut at the September meeting, but only if the data pointed to a weakening labour market.

“Weakness in the markets is being driven by a sell-off in equities as concerns begin to grow around a slowdown in the US economy. Bets are now mounting that the Fed will need to be more aggressive with its rate cuts than previously anticipated to stave off a recession,” RMB head of forex execution Matete Thulare said.

Share indices in Australia, Hong Kong and China also dropped heavily. London's FTSE 100 opened 2% lower, hitting its lowest level since April.

The rand fell more than 1%, reaching an intraday worst of R18.5360/$ — the weakest level in a month.

At 10.13am, the rand had weakened 1.1% to R18.4865/$, 1.61% to R20.2702/€ and 1.27% to R23.6797/£. The euro was 0.52% firmer at $1,0966.

Reuters reported that gold lost some of its safe-haven appeal, down 0.5% at $2,431/oz. Oil prices eased as concerns about global energy demand offset worries about the potential effect on supply from a widening conflict in the Middle East. Brent fell 64c to $76.17 a barrel. 

tsobol@businesslive.co.za