Johannesburg – The JSE shipped more than 300 points on Wednesday,
to go with 700 points it shed on Tuesday, in line with global markets amid
continued concerns over Europe after credit rating agency Moody's said
it may downgrade Portugal's sovereign debt, while violent protests hit
the streets of Athens.
The local bourse did however, come off its earlier high.
The JSE all share index shed 1.14% with resources down 0.41%. Platinum miners lost 3.14%,
but gold miners were up 0.21%. Banks dropped 2.57%, financials shipped 1.68% and industrials were 1.6% softer.
The rand was bid at R7.61 to the dollar from R7.56 at the JSE's close on Tuesday. Gold was
quoted at $1 172.29/oz a troy ounce from $1 173.78/oz at the JSE's last
close. Platinum was at $1 650/oz from $1 687/oz at the JSE's last close.
local equities trader said: "After a brief start in positive territory this morning, the
local bourse began to plummet at around midday when news filtered through that
Moody's may downgrade Portugal.
"We did come off our earlier highs at close, however there appears to be no end in sight
regarding the situation in Greece, and now other parts of Europe. The market
has been selective over its news," he said.
Dow Jones Newswires reported that US stocks tumbled at Wednesday's open, hit by heightened
concerns over Europe as violence erupted in Greece and a possible downgrade
loomed over Portugal's debt.
The Dow Jones Industrial Average slid 86 points, or 0.8%, to 10840, in early trading,
extending Tuesday's 225-point drop. Meanwhile the Nasdaq Composite fell 1.3% and
Standard & Poor's 500-stock index dropped 1%. Financials and
consumer discretionary stocks led its declines.
Wednesday's early drop came after Moody's Investors Service placed Portugal's government
bond rating under review for a possible downgrade based on the
deterioration of the country's public finances and its long-term economic
challenges. Meanwhile in Greece, a nationwide strike spiralled into violence. Three
people were killed after a fire broke out in riots near an Athens bank.
worries sent the euro crashing to new one-year low as the dollar soared. The US Dollar
Index, which represents the US currency against a basket of six others,
was up 1.1%. As investors fled from riskier assets, crude-oil prices
tumbled to below $80 a barrel. Gold futures also sank.
a potential downgrade to Portugal could impact portfolio managers obligated to
pull out of assets downgraded by two of the three major credit rating
"Now it's musical chairs and do I want to be the one without a chair when this thing
starts to go bad?" asked Bob Tull, chief operating officer at Old Mutual Global
Index Trackers. "I don't think anyone wants to be in that position
Concerns over Europe overshadowed a slightly better-than-expected report on private sector
employment from payroll giant Automatic Data Processing.
Private-sector employers added 32 000 jobs in April, according to ADP, more than the 20 000
expected by economists surveyed by Dow Jones Newswires.
On Friday, the
government will release its key monthly jobs report for April. Economists
expect the unemployment rate to stick at 9.7%, where it was in March.
- I-Net Bridge