Johannesburg - The JSE experienced its biggest one-day fall since January 2 on Thursday‚ shedding almost 2% on the day‚ after a wide selloff in commodities across the world was extended from Wednesday‚ putting the JSE and other global markets firmly in risk-off mode.
The selloff was triggered by growing investor concerns after news on Wednesday that the third round of US quantitative easing (QE3) could end earlier than expected‚ which would reduce liquidity levels‚ which have benefited commodity prices and global markets of late.
The minutes of the Federal Open Market Committee (FOMC) meeting in the US on Wednesday suggested that the US Federal Reserve will cut back on unlimited asset purchases‚ which pushed the US dollar stronger and in turn forced commodity prices weaker.
At 17:00 the All Share [JSE:J203] index closed 1.88% lower at 39 670.09 points after closing 0.75% weaker on Wednesday. The Top 40 - (Tradeable) [JSE:J200] index shed 2.07% to close at 35 278.23 points.
Platinums‚ followed by gold and resources counters took the worst punches with the platinum index slumping 4.91%‚ the gold gauge shedding 3.59% and the resource index giving back 3.43%.
Major European markets were all trading in negative territory‚ with the UK’s FTSE 100 seen down 1.62% at 17:00 local time. The Dow Jones Industrial index was trading 0.43% softer at the same time.
“A merciless day in the market saw no sectors trade into positive territory. Resource counters were again the poorest performing equities with the gold mining‚ platinum and precious metals and resource indices shedding well over 3% during the course of the day‚” Shaun Murison‚ market analyst at IG Markets said.
“Wednesday evening’s Federal Open Market Committee (FOMC) meeting provided the catalyst to a risk-off scenario. A suggestion of slowing current easing measures resulted in a stronger dollar and in turn‚ a contraction in commodity prices. The spot price of precious metals is now retreating significantly with gold now trading firmly below the $1‚600/oz level and platinum now flirting with the same level after trading above $1‚700/oz only a few days ago‚” he said.
At 17:00 local time the platinum price was 2.13% lower at $1 609/oz‚ while the gold price was quoted at $1 576‚24/oz at the same time.
“The impact of the aforementioned catalyst was most noticeable in companies such as Impala Platinum and DRD Gold and newly listed Sibanye Gold‚ which fell more than 5% intraday‚” Murison said.
“We are now witnessing a return to volatility from a period which has been relatively kind to investors over the last year or so. Intraday swings in price data are becoming greater in size‚ highlighting the added need for caution in the current trading environment‚” he said.
On the JSE‚ Anglo American (AGL) lost 2.85% to close at R260.84 and rival BHP Billiton (BIL) dropped 3.61% to R286.16 and Sasol (SOL) gave back 2.60% to R382.62.
Among platinum counters Lonmin (LON) tumbled 5.55% to R46.99‚ Impala Platinum (IMP) shed 5.83% to R137 and Anglo American Platinum (AMS) closed down 3.17% at R428.
Bullion counters Gold Fields (GFI) shed 3.40% to R77.90‚ Anglogold Ashanti (ANG) lost 3.95% to R223.02 and Sibanye Gold (SGL) gave up 3.02% to R12.85. DRDGold (DRD) suffered a 10.85% fall to close at R6.41.
Financial services company Discovery and pharmaceutical player Aspen were among a handful of counters to provide a ray of hope on the day with Discovery (DSY) closing 3.18% higher at R67.48 after reporting a 19% increase in diluted headline earnings per share to 221.2c for the six months ended December from 185.4c a year ago.
Aspen (APN) ended the day 1.14% firmer at R164.50 after a positive trading update stating that diluted normalised headline earnings per share from continuing operations are expected to rise by between 21% to 25% for the six months ended December 31.
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