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Stock rout worsens ahead of US-China tariff deadline

May 09 2019 17:46
Musa Makoni, Purple Group

The JSE tracked other global markets lower on Thursday as investors increasingly became wary that a deal wouldn’t be reached before Friday’s deadline for tariff hikes.

In Asia, stocks in mainland China are closer to retesting two-month lows as the Shanghai Composite Index fell 1.85% while in Hong Kong, the Hang Seng lost 2.39%. In Japan, the Nikkei lost 0.93%. In Europe, automakers led the weakness across most of the blue-chips as all the major indices traded weaker. In the USA, the Dow Jones and S&P500 also opened significantly weaker as investors shrugged off riskier assets for safe-havens.

On the currency market, the US dollar continued to retreat from its recent highs as the 3-month and 10-year US Treasury yields’ spread narrowed as little as 6 basis points on Wednesday. This did well for emerging market currencies such as the rand which strengthened to a session high of R14.30/$ before it weakened sharply to trade 0.52% weaker at R14.43/$ at 17.00 CAT.

In terms of local economic data, there was a marked improved in mining production MoM for the month of March as it advanced 3.8%, easily beating the forecasted contraction of 3%. Mining production YoY fell 1.1% which was also an improvement from the prior decline of 8.1%. Manufacturing production YoY rose 1.2% from a prior recording of 0.5%, while MoM it advanced 0.8% from a prior contraction of 2%.

On the JSE, Steinhoff International [JSE:SNH] led the day’s losers following the release of its restated 2017 financial results. The stock fell 20.4% to end the day at R1.60. Miners also struggled on the day with significant losses being recorded for Sibanye Stillwater [JSE:SGL] which stumbled 5.7% to close at R12.40, Impala Platinum [JSE:IMP] which lost 6.19% to end the day at R56.39, and Kumba Iron Ore [JSE:KIO] which fell 3.42% to close at R429.00.

Rand hedge, Sappi [JSE:SAP] dropped 8.53% to close at R61.10, while Reinet Investments [JSE:RNI] lost 3.87% to end the day at R228.01. Index giant Naspers [JSE:NPN] lost 3.76% to close at R3410.00 after Tencent Holdings closed lower on the Hang Seng.

Gains were elusive for blue-chip stocks in today’s trading session. Hospitality group Tsogo Sun Holdings [JSE:TSH] managed to gain 1.75% to end the day at R22.08, while Allied Electronics [JSE:AEL] added 5.09% to close at R21.49. Brait [JSE:BAT] gained 0.65% to close at R23.15, while Multichoice [JSE:MCG] inched up 0.48% to end the day at R125.50. Mediclinic [JSE:MEI] managed to gain 0.17% as it closed at R63.55, while Transaction Capital [JSE:TCP] firmed to R19.18 after adding 1.11%.

The JSE All-Share index dropped even further towards the close eventually closing 2.5% lower while the JSE Top-40 index dropped 2.62%. Another downtrend session ensued for all the major indices as they all closed weaker. The Industrials index lost 2.63%, Financials fell 2.59%, and Resources slumped 2.7%.

At 17.00 CAT, Gold was up 0.33% to trade at $1285.10/Oz, Platinum was 1.21% weaker at $850.95/Oz, and Palladium was down 2.94% to trade at $1282.91/Oz.

More weakness was recorded for brent crude which was trading 0.97% weaker at $69.69/barrel just after the JSE close.

9 May

equities  |  jse  |  markets
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