Johannesburg - Renewed concerns about the global economy - and the Chinese economy in particular - pushed the pause button on the recent rally in global stocks on Wednesday morning, with the JSE following suit.
Although the drop on the JSE by midmorning was modest compared to Asian markets, it did seem investors are ready to take profits after the strong run in share prices since the budget.
In particular, some of the resources shares - which have made spectacular recoveries lately - were among the hardest hit, including Kumba [JSE:KIO], Lonmin [JSE:LON] and ArcelorMittal [JSE:ACL].
By Wednesday mid-morning the Resources index had lost 1.3%, pushing the All-share index 0.36% down to 52 060 points and the Top 40 index 0.10% lower to 46 184 points.
The Financial index, which was under pressure on Tuesday after FirstRand’s [JSE:FSR] disappointing results, lost another 0.47% but the Industrial index traded 0.60% higher.
The reality check for the markets this week was the latest Chinese trade figures announced earlier. Asian markets were lower again, with the Chinese markets losing more than 1%.
China's February trade performance was far worse than economists had expected, with exports tumbling the most in over six years.
Exports dived 25.4% from a year earlier on depressed demand in all of China's major markets, while imports slumped 13.8% in the 16th straight month of decline.
This is not good news for the exporters of commodities, as it seems demand for resources will be much weaker than originally expected. Expectations that Chinese steel factories will ramp up production, which supported the iron ore price, do not seem so realistic any more.
Gold and platinum also traded lower on Wednesday morning, leading to the Gold index trading 2.82% lower by mid-morning.
"Investors are once again focused towards the scanty economic data over in China and the anxiety is if the People's Bank of China has the right tools to help the recovery," said Naeem Aslam, chief market analyst at AvaTrade.
South Africa’s two biggest iron producers, Kumba and Assore [JSE:ASR], which both made spectacular recoveries on the JSE, were down. Kumba, which gained 34% on Monday after a temporary spike in the iron ore price, fell sharply for the second day and traded 5.96% lower at R85.11. Before Wednesday’s trade however the stock was still 181.31% higher over the past 30 days.
Assore, which traded at a 52-week high of R165.00 earlier in the week, gave up 3.30% on Wednesday morning and traded at R160.00. Up until Tuesday, the share price increased by 92.08% over 90 days.
Lonmin [JSE:LON], which gained 76.8% over the past seven days and 162.8% over the past 30 days, lost 6.17% on Wednesday morning after a similar drop on Tuesday.
ArcelorMittal, which was 37.5% higher than a week ago and 100% higher than 30 days ago before morning trade, was 7.7% down on R9.20.
Even the big commodity conglomerates were lower after strong runs over recent weeks, but their losses were more modest. Anglo American [JSE:AGL] traded 1.77% softer at R117.57 after gaining 106.36% over the past 30 days, while BHP Billiton [JSE:BIL] gave up 1.02% to R178.29.
Sasol [JSE:SOL] lost 2.34% to R480.34 after the price of Brent crude oil again dipped to below $40 per barrel, on the news that US inventories of crude are still at record highs.
READ: Crude prices subdued on weak Chinese trade data
In the financial sector FirstRand [JSE:FSR] lost 2.67% to R44.38. The group shocked the market on Tuesday with earnings growth of only 3% compared to double-digit growth by other banking groups, losing more than 7%.
Old Mutual [JSE:OML], which was highly volatile earlier in the week on news that the group might be split up in four standalone businesses, gained 0.89% to R42.10. The goup will give more information on possible restructuring when it announces its results on Friday.
Assore, which traded at a 52-week high of R165.00 earlier in the week, gave up 3.30% on Wednesday morning to change hands at R160.00. Up until Wedesday day the share price increased with 92.08% over 90 days.
Lonmin, which gained 76.8% over the past seven days and 162.8% over the past 30 days, lost 6.17% on Wednesday morning after a similar drop on Tuesday.
ArcelorMittal, which before Wednesday morning was 37.5% higher than a week ago and 100% higher than 30 days ago, lost 7.7% at R9.20.