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JSE tracks world markets lower

Johannesburg - Share prices on the JSE were again lower on Friday morning, in line with the negative sentiment on markets worldwide.

International investors are concerned about indications from China that the world’s second-biggest economy is slowing down rapidly, which will have a negative influence on exports to China. For South Africa, it will mean that demand for commodities will slow down with a negative influence on prices and exports.

By midday on Friday the All-share index, which dropped below 50 000 points on Thursday, was another 1.07% lower at 49 228 points and the Top 40 index lost 1.13% to trade at 43 648 points. Analysts expect the selling pressure to continue, as the indices have dropped below important support levels.

The big losers were again financial (-1.43%) and industrial shares (-1.14%), with the Resources index almost unchanged  Most of the positive action was in the precious metals section, with the Gold index gaining another 5.28% to trade well above 1 000 points at 1 052 points.

Resources - and gold shares in particular - are being temporarily supported by the weaker US dollar. The unit lost ground against major currencies when it became clear that American interest rates would probably not be hiked as soon as originally expected. US bond yields are also falling.

Rand weakness is providing some support for gold shares, with traders saying the local currency is also discounting the negative effects of a slowdown in China.

Technical analysts are however warning that the potential for a long-term recovery in resources stocks is slim, as the demand for commodities will remain under pressure if the Chinese economy does not recover quickly.

Market sentiment worldwide took a beating after it was announced that a manufacturing index showed activity in China's factory sector shrank at its fastest pace in almost six-and-a-half-years in August, as domestic and export demand dwindled.

READ: China factory slowdown raises global growth fears

Wall Street's Dow Jones index was at its lowest level this year after breaking below its 200-day average, European stocks were also lower on Friday and markets tumbled in Asia. The Chinese market lost over 11% this week, the worst in over a month. The Nikkei index in Tokyo tumbled almost 3%, and the Hang Seng index in Hong Kong was more than 1.5% lower.

To add insult to injury, Imara SP Reid said major JSE indices have now reached important support levels which will increase the selling pressure. The Industrial index has also decisively breached its 200-day moving average following Thursday’s 1.66% drop, which indicates additional short-term technical weakness.

The only positive is that the major indices moved mostly sideways on Friday morning after opening sharply lower. In fact the All-share index was more than 1% lower than Thursday’s closing level, but still slightly above Friday morning’s opening number.

MTN [JSE:MTN] was again one of the biggest losers among the top shares and traded another 2.48% lower at R182.85. Before Friday’s trading the share was already 6.39% lower over the past seven days. Vodacom [JSE:VOD] however gained 0.58% to R140.01.

Naspers [JSE:NPN] also lost 1.24% to R1 609.11 and SABMiller [JSE:SAB] traded 0.53% weaker at R639.50. Richemont [JSE:CFR] was however rather resilient and gained 0.42% to R100.37.

The weaker oil price continued to hammer Sasol’s [JSE:SOL] share price. The stock, which has lost 7.37% over the past seven days, was another 2.14% softer on Friday morning at R384.02.

AngloGold Ashanti [JSE:ANG] was the busiest share in the Gold index and gained another 7.3% to R123.45. The share price was already 21.1% higher over the past seven days before Friday morning’s gain.

Anglo American Platinum [JSE:AMS], which gained 16.61% over the past week, was the busiest share in the platinum sector but lost 1.13% to R340.99.

Lonmin [JSE:LON], which gained a spectacular 22% on Thursday, was another 6.56% stronger on Friday to trade at R7.15. After Thursday’s strong performance the share price was still 17% lower over the past week.

Standard Bank [JSE:SBK] lost 1.06% to R143.72.

                  
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Rand - Dollar
19.02
-0.6%
Rand - Pound
23.97
-0.3%
Rand - Euro
20.53
-0.3%
Rand - Aus dollar
12.35
-0.0%
Rand - Yen
0.13
-0.6%
Platinum
894.10
-0.3%
Palladium
996.00
-0.6%
Gold
2,196.05
+0.1%
Silver
24.45
-0.8%
Brent Crude
86.09
-0.2%
Top 40
67,848
+0.3%
All Share
74,067
+0.2%
Resource 10
56,251
+1.1%
Industrial 25
103,518
+0.2%
Financial 15
16,466
-0.4%
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