JSE banking stocks slip amid Deutsche Bank jitters

Johannesburg - Concern about the health of Germany’s biggest bank dragged share prices down globally, and financial shares were also the biggest losers on the JSE. The four major banks all traded substantially lower.

The global rout started on Thursday, when Wall Street lost about 1% as Deutsche Bank shares slumped to a record low after a report that a number of funds that clear derivatives trades have withdrawn some excess cash and positions held at the lender. Deutsche Bank's US shares closed 6.7% down, after losing more than 10% earlier in the week on the Frankfurt exchange.

European shares were also sharply down and in early trading were at the lowest level in eight weeks. Deutsche Bank fell nearly 9% to below €10 for the first time after steep losses earlier in the week.

The cause of Deutsche Bank’s problem is a fine of up to $14bn by the US Department of Justice over its sale of mortgage-backed securities. The bank disputed the claim. Other banks face similar fines.

The Financial index on the JSE was at one stage almost 2% lower. The Industrial index, which includes most of the big dual-listed shares, was also pulled down by weaker European markets.

The All-share index was at that stage 0.66% lower at 52 353 points, while the Top 40 index traded 0.56% softer at 45 837 points. The Financial index shed 1.74% and the Industrial index was 0.80% down. The indices dropped sharply after the opening, but then recovered slowly for the rest of the morning.

Resources were in the black but highly volatile. The index was 0.97% higher at mid-morning, but lost almost 1% earlier on the back of news that China's factory output expanded at the slowest pace in three months in September. China's industries are the biggest consumers of commodities.

The Gold index was 3.55% higher as investors rushed to gold as a safe haven. The shares were also supported by a weaker rand, which traded 0.86% softer at R14.02 to the dollar as markets await new US data which will give an indication of when US interest rates might be hiked.

The chance of a December increase is still seen at around 50-50, but markets are jittery as important economic data will be announced next week.

Numbers to watch include September manufacturing and August construction spending data on Monday, non-manufacturing indices for September and August factory orders on Wednesday and non-farm payrolls for September on Friday.

Oil prices, which supported global markets on Thursday, also pulled back after rising 7% in two days after Opec agreed to its first output cuts in eight years.

Analysts are sceptical about the sustainability of the accord as it has not yet defined individual quotas or other forms of accountability. Some analysts are also sceptical if the reduction would be enough to make a substantial dent in the global crude glut. Brent crude traded 0.86% lower at $48.66.

By mid-morning on Friday FirstRand [JSE:FSR] was the busiest share on the JSE in terms of volume, and more than 3 million shares were at stage traded for R148.7m. The share price lost 1.7% to R46.91.

Standard Bank [JSE:SBK] traded 2.45% lower at R142.50 while Nedbank [JSE:NED] shed 2.19% to R222.05. Barclays Africa [JSE:BGA] lost 2.85% of its value to R151.15.

Naspers [JSE:NPN] lost 0.84% on Friday morning to R2 399.19, and Steinhoff [JSE:SHF] was 1.74% softer at R79.45. MTN [JSE:MTN] also lost ground and traded 1.16% lower at R119.60. British American Tobacco [JSE:BTI] was however 0.26% higher at R894.45, and Richemont [JSE:CFA] 0.06% stronger at R84.69.

Anglo American [JSE:AGL] set yet another 52-week high of R174.80 as the share gained 1.02%. It lifted almost 10% in the seven days before Friday’s trade. BHP Billiton [JSE:BIL] is now well above R200 per share again, as the stock traded 1.36% up at R210.33.