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Commodities sell-off drags on JSE

Johannesburg - The JSE suffered a sell-off along with many other equities markets on Thursday, pressured by a drop in commodity prices and the resurgent dollar.

"The sharp sell-off in commodities, from last week, and the strong dollar are still putting pressure on the market," an equity derivatives dealer said.

By 17:00 local time, the JSE All Share [JSE:J203] index had fallen 1.15%, with resources falling 1.58%, platinum miners dropping 0.75% and gold miners easing 1.12%. Banks slid 1.18%, financials were down 1.15% and industrials slid 0.79%.

The rand was bid at 6.93 to the dollar from 6.80 at the JSE's close on Wednesday. Gold was quoted at US$1 490.67 a troy ounce from US$1 509.20/oz at the JSE's previous close, while platinum was at $1 757.50/oz, from $1 784.50/oz previously.

The equity derivatives dealer said there was risk-aversion, which was seeing global investors running away from risker assets such as equities. Uncertainty about the global economic outlook, euro-zone debt problems and concerns over China also all added to the negative mood, he said.

Dow Jones Newswires reported that US stocks opened lower on Thursday as a warning from Cisco Systems and a further slide in commodities prices pushed investors into safer assets.

The Dow Jones Industrial Average slipped 74 points, or 0.6%, at 12 556 in early trading.

Energy stocks led the declines for a second straight day as commodity prices tumbled. Crude-oil futures continued their recent slide, falling to just above US$97 a barrel from a close of nearly US$104 a barrel on Tuesday, a steep downturn that has hit energy stocks. Oil prices are now down 15% for the month.

In economic news, weekly initial claims for jobless benefits fell by 44 000 to 434 000, slightly above expectations. Retail sales rose 0.5%, just below consensus estimates of a 0.6% rise. Producer price inflation was also a little higher than expected, rising 0.8%, while so-called core inflation, which strips out energy and food costs, edged up 0.3%. Expectations were for headline inflation of 0.7%, and core inflation at 0.2%.

Elsewhere, the slide in commodities prices dragged European and Asian markets broadly lower. Gold futures dropped below US$1 500 an ounce, while silver tumbled 6.4% to bring its May losses to 32%. The US dollar was mixed, strengthening slightly against the euro but slipping versus the yen.

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Rand - Dollar
18.89
+0.2%
Rand - Pound
23.84
+0.3%
Rand - Euro
20.36
+0.4%
Rand - Aus dollar
12.30
+0.3%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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