Johannesburg – The JSE slipped by just under 1 000 points, or 3.6% on Friday tracking a freefall on Wall Street with a trader citing possible panic in the markets due to a lack of any substantial new initiatives to address the eurozone sovereign debt crisis.
The local bourse has dropped more than 2 100 points over the past four days.
At its close the JSE all share index was off 3.63%, with resources 2.67% softer, and platinum miners 3.3% weaker. Gold miners added 0.71%. Banks were off 5.85%, financials shed 4.86% and industrials were 3.96% lower.
The rand was bid at R7.69 to the dollar from R7.67 at the JSE's close on Thursday. Gold was quoted at $1 199.40 a troy ounce from $1 184.47/oz at the JSE's last close. Platinum was at $1 655/oz from $1 665/oz at the JSE's last close.
"Its carnage on the local bourse again today," a local equities trader said. "US markets were nearly 230 points lower earlier, but have since come off those lows. There is still major concern over Greece's debt woes and with additional concern that it may spread to other European countries, with very little by way of solutions for these problems.
"The euro hasn't done us any favours either," he said.
One other trader said: "There is no one reason for this drop. Valuations may be stressed and we could just be seeing triggering of stop losses. Volatility abounds following a steep slide on Wall Street yesterday, and we could be seeing some panic in the markets. The main trigger however, is probably the ongoing problems in Greece and neighbouring countries, " he said.
Dow Jones Newswires reported that US stocks plunged again on Friday morning, wiping out the year's gains for the major market measures.
The downward move came despite a Labour Department report showing job growth at its fastest pace in four years, reflecting continued investor worries over sovereign debt, the pace of the recovery and jitters from Thursday's steep slide.
The Dow Jones Industrial Average was down 2.1%, or 227.1 points recently, to 10 286, while the Standard & Poor's 500 fell 2.9% to 1095.5. Both measures were slightly up after the open. The moves follow a volatile Thursday when the Dow fell nearly 1 000 points mid-afternoon, before closing off 3.2%.
Trading was unusually heavy. An hour into trading, New York Stock Exchange composite volume was already near its average midday levels. By 10:30, nearly 2.6 billion shares traded had changed hands, with nearly 95% of trading in the downward direction.
'Investors are growing more risk-averse'Some market watchers were looking beyond the good news in Friday's jobs report to the notion that investors may be seeing a top in this year's bull market.
"I think what we saw yesterday was maybe a true measure of what people think the value of the market is, despite glitches or computers or whatever," Barry James, president and CEO of James Investment Research said. Today's action is a sign that investors are growing more risk-averse, he said.
The action comes after one of the most tumultuous stock sessions in history.
US stocks ended with steep losses on Thursday after an afternoon meltdown lopped nearly 1 000 points off the Dow--its biggest intraday drop on a point basis ever-before a partial recovery. The Dow finished the day down 347 points, or 3.2%.
Earlier in the day, outside the New York Stock Exchange, traders had voiced sanguine expectations. "It's going to be relative stable today," one said, predicting the day's action won't see a repeat of Thursday's turmoil.
Trader after trader filing into the exchange echoed that sentiment.
In its closely watched employment report, the Labour Department said nonfarm payrolls rose by a higher-than-expected 290 000 last month, the largest gain since March 2006. That followed an upwardly revised 230 000 increase in March.
Economists polled by Dow Jones Newswires were expecting payrolls to rise by 180 000. The March figure was originally reported as a 162 000 increase.
Taking into account revisions to prior months, the US economy added an average of 143 000 jobs a month in the first four months of the year.
However, as a reminder of the labour market's continued weakness, the unemployment rate increased to 9.9% last month. Economists were expecting it to remain at March's 9.7% level.
Whether the eurozone can contain Greece's debt crisis will again be in focus on Friday as Germany votes on its contribution to the joint European Union - International Monetary Fund €110bn loan package for Greece. The finance ministers of the Group of Seven leading economies are due to hold a telephone conference to discuss the Greek debt turmoil.
- I-Net Bridge