Johannesburg – The JSE tracked global sentiment lower on Wednesday, having
initially opened in the black.
Mining sector stocks initially lifted the local bourse, tracking events in Australia where
opposition against a proposed 40% tax on the so-called "super
profits" of the country's
mining companies gathered momentum.
However, positive sentiment was short lived as the FTSE lost ground early on
amid continued concerns
over Greece's rescue package and Dow futures also tracked lower.
By
09:44 the JSE all share index was 0.45% lower with resources off 0.21%. Platinum miners lost
1.05%, and gold miners declined 0.31%. Banks dropped 1.18%, financials shipped 0.79%, and industrials were 0.58%
softer.
The rand was bid at R7.57 to the dollar from R7.56 at the JSE's close on Tuesday.
Gold was quoted at $1 167.65/oz a troy ounce from $1 173.78/oz at the JSE's last close. Platinum was
at $1 672.50/oz from $1 687/oz at the JSE's last close.
A
local trader said: "We initially opened firmer on news coming out of
Australia regarding opposition
to the proposed mining tax, however the reality is that the tax will go through, it
is just a question of when. The FTSE lost ground at its opening amid continued
concerns over Greece, and Dow Futures are off."
One other trader said earlier: "We saw a slight bounce this morning as the
market tracks events in
Australia, where it appears that mining companies will fight the proposed tax on
miners. Mining stocks on the local bourse have therefore been the most active.
"US futures are slightly firmer, but whether or not this bounce continues
is unclear," the
trader said.
Dow Jones Newswires reported that European stocks opened lower taking its cue
from downbeat US and Asian
sessions, while investors question the viability of the Greek rescue package, amid
fears that the debt crisis could spread to other vulnerable countries in Europe.
"We're
seeing a classic example of the market running scared at the moment. It's been attacked from
many different angles. The European situation is causing the most angst as fears of
contagion into Portugal and Spain escalate," said Ben Potter, research analyst at
IG Markets.
While there is
some scope that Tuesday's selloff could be looking a little dramatic, equity markets have
been considered toppy by many for some months now, leaving an adjustment looking
overdue, Potter added.
Greece will continue to be the main focus, with thousands of public and private
sector workers set to
join a nationwide strike on Wednesday to protest against the austerity measures
the country needs to implement in return for its aid package, while the Greek parliament
is expected to vote on those measures on Thursday. On Friday, European leaders will
hold a summit to approve the bailout.
"Strikes in Greece and public disorder have increased disquiet amongst
investors that for all the
soothing words from Greek officials about imposing the necessary cuts, being allowed
to implement them over the next three years will be another matter altogether,"
said Michael Hewson at CMC Markets.
On
Wall Street Tuesday, the Dow Jones Industrial Average fell 2% to 10,926.77, its
lowest close since
April 7.
The broad stock declines came as the euro fell to a 12-month low against the dollar on rising
doubt over whether the Greek government can carry out the strict austerity measures
required in the aid package.
In
Asia, shares were lower on Wednesday, with investors worried by the DJIA's 2% fall Tuesday.
Property stocks in China and commodity plays in Australia led the declines.
Australia's
S&P/ASX 200 was down 1.3%, the Shanghai Composite was 0.2% lower, Hong Kong's Hang Seng
Index fell 2.1%. Japanese markets were closed for holidays.
Australia's main conservative Liberal-National opposition won't support the government's proposed
40% tax on the so-called "super profits" of the country's mining companies, Liberal
leader Tony Abbott said on Wednesday.
- I-Net Bridge