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Cape Town - The post-Brexit rally on global markets seems to be something of the past and share prices on the JSE were on Tuesday morning lower from the start of trading.
European markets were lower on Tuesday for the second day running and emerging markets also ended their five day rally as investors locked in their gains of the past few days. Emerging market currencies, including the rand were also lower.
Global markets recovered almost half of the losses suffered after Britain voted to leave the European Union on expectations that the world’s leading central banks will lower record low interest rates even further to promote economic growth, but the feeling is now that the rally was overdone.
The JSE made a strong start on Monday morning but then lost momentum and the major indices closed barely in the black. On Tuesday morning prices were lower from the start and the intraday graph showed a steady decline.
By midmorning the All Share-index was already 1.04% lower on 51 909 points and the Top 40-index was 0.98% down to 45 578 points. The All Share-index did not gain as much as European markets over the past few days and was before today’s trade only 1.5% higher over the past seven days. The 40-index gained only 1% over that period.
The banking and resources indices were the big losers on Tuesday in line with European markets and the financial index traded 1.64% lower, after losing 1.3% over the previous seven days. The resources index, which gained more than 6% over the previous seven days, traded 1.74% lower. The industrial index, which gained only 0.45% over the past seven days, gave it all back and was 0.60% lower.
The gold index also dropped 0.23% on the back of a lower gold price, which traded 0.50% lower on $1 343 per fine ounce. Anglogold Ashanti [JSE:ANG] however gained 0.5% to reach a new 52 week high of R287.25.
Before Tuesday’s declines, emerging markets lured about $1.2bn so far this month amid expectations that central banks in Europe and Asia will add to monetary stimulus to support economic growth after the Brexit referendum. At the same time, bets that the Federal Reserve will increase interest rates this year have evaporated.
The JSE also experienced the highest inflow of capital in more than seven years.
European equities jumped 7.6% in the four days through Friday, recovering more than half their losses from the aftermath of Britain’s vote to leave the European Union. On Tuesday the Stoxx Europe 600 Index dropped 0.8% and all 19 industry groups retreated.
The two double listed financial shares on the JSE, Investec PLC [JSE:INP] and Old Mutual [JSE:OML] were again in the firing line. Investec traded 3.09% lower on R85.26 after it lost 5.9% over the previous seven days. Old Mutual traded 2.07% softer on R37.45.
Amongst the local banks Standard Bank [JSE:SBK] traded 1.36% lower and FirstRand [JSE:FSR] was 1.14% softer on R139.42. Barclays Africa [JSE:BGA] hardly moved and traded only 0.01% lower on R139.42.
In the resources sector the big conglomerates listed in London were sharply lower. Anglo American [JSE:AGL], which was 9,73% higher over the previous seven days, lost more than half of it when it traded 5.1% lower on R141.30. BHP Billiton [JSE:BIL] traded 1.65% softer on R180.98.
Lonmin [JSE:LON], which gained 23.46% over the past seven days as the platinum price rose 8% over the same period, lost 0.95% on Tuesday to R23.46. The platinum price was 0.85% softer on $1 056 per ounce. Anglo American Platinum [JSE:AMP] lost 1.26% after gaining 12.4% over the previous seven days. Impala Platinum [JSE:IMP] was before today’s trade 18.5% higher over the past seven days, but lost 1.67% on Tuesday to R51.67.
Royal Bafokeng Platinum [JSE:RBP] which reached a new 52 week high on Monday of R51.50 after gaining 30.28% over seven days, also traded lower on Tuesday and was 1.53% softer on R50.71.
