JSE skids as Greek concerns weigh

Johannesburg - The JSE moved sharply into the red on Friday following Wall Street's plummet overnight and amid continuing financial concerns for Greece.

By 09:22 the JSE all share index was off 1.86%, with resources 1.52% softer, and platinum miners 1.73% weaker. Gold miners added 0.42%. Banks were off 2.82%, financials shed 2.48% and industrials were 1.96% lower.

The rand was bid at R7.79 to the dollar from R7.61 at the JSE's close on Wednesday. Gold was quoted at $1 1202.83 a troy ounce from $1 184.47 at the JSE's last close. Platinum was at $1 665/oz from $1 665/oz at the JSE's last close.

A local trader said: "It appears as thought there was a glitch in the system on Wall Street overnight, however that came on top of weaker markets. As a result, the JSE is under pressure this morning, amid a soft rand.

"Gold stocks have shown some resilience however amid a firm gold price. US futures are a tad higher, possibly looking for some correction, but it doesn't put Greece and Europe's monetary issues out of the way.

"Non-farm payrolls data is out later in the US today, and they would hope for some positive news," the trader said.

European stocks were also lower on Friday, following sharp losses on Wall Street on Thursday, amid lingering concerns over sovereign debt and ahead of the release of non-farm payrolls data, according to Dow Jones Newswires.

"There's still no definitive justification for precisely what happened in the US last night, but the general equities selloff as contagion fears spread, combined with what looks like some erroneous trade, had what can perhaps be best described as disastrous consequences," said Ben Potter, research analyst at IG Markets.

Although US stocks managed to stage a slight rebound late in the session, European markets will still be playing catch up at the open and banks seem likely to remain at the forefront of any continuation in the selloff, Potter added.

London's FTSE 100 index was down 83 points at 5177 in early trade.

Still, with Wall Street futures now edging higher, there may be some respite in sight.

In the UK, the prospect of a hung parliament is weighing on sentiment, with many worried that a stalemate would make it more difficult for the country to address its debt problems.

"Although the Conservative Party may yet get the most votes, convention states that they won't have the first opportunity to try and form a government. The longer any political discussions drag on for, the more nervous financial markets can expect to become, standing to weaken further both sterling and UK equities," said Potter.

Elsewhere, Greece will continue to remain in the spotlight as the EU holds a summit on the country's bailout, while concerns over sovereign debt contagion linger, particularly after the European Central Bank failed to reassure markets on Thursday.

"The comments from the ECB overnight that it wasn't even considering the purchasing of eurozone government bonds eroded a lot of confidence. At the end of the day, we're talking about countries going bust, not companies. The ECB missed a prime opportunity to boost confidence - it's far too reactive rather than getting on the front foot," said Potter.
 
Trades reversed

In a note to clients on Friday, CEO of derivatives trading firm Global Trader Charles Savaged said the group would be reversing a number of trades which had taken place overnight.

"The result of this extreme volatility and greatly increased price action was that our own system could not keep up with the sheer price and trade volume," Savage said. "We were forced to suspend online trading for an extended period until market conditions resolved back to 'normal'."

Simon Brown from Standard Bank Online Share Trading, one of South Africa's largest retail share trading platforms, told Fin24.com the group was not impacted by the night's events as it only traded JSE-listed products. Its clients were not trading overnight.

 - Fin24.com