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Trump’s tariff threats against Mexico send stocks lower

May 31 2019 18:18
Musa Makoni, Purple Group

The JSE retreated to close weaker on Friday as it tracked other major global indices lower.

The moves lower across most equity markets were triggered by Donald Trump’s threat for increased tariffs against Mexico in retaliation to the influx of immigrants into the US from Mexico. The US is already in a full-fledged trade war with China, and this latest development with Mexico raises more concerns for investors who are struggling to fully comprehend the impact of that trade war with China.

In Japan the Nikkei fell 1.63%, in Hong Kong the Hang Seng lost 0.79% while in mainland China the Shanghai Composite Index lost 0.31%. In Europe all the major indices were down by more than 1% on average while the US’s major indices opened considerably lower.

The rand managed to recoup some of the losses that it has taken over the past couple of sessions as it advanced on Friday. The strength in the rand was mainly due to the weakness that was recorded in the greenback as indicated by the US dollar index which traded marginally softer. The rand had peaked at a session high of R14.53/$ before it was recorded trading 1.09% firmer at R14.56/$ at 17:00.

On the JSE, Tongaat Hulett [JSE:TON] came under significant pressure following the release of a strategic and financial review, in which the company stated that the financial statements for the year ended March 31, 2018 would need to be restated. The stock fell 7.73% to close at R16.70.

EOH Holdings [JSE:EOH] also struggled on the day as it fell 7.23% to close at R19.25, while cement maker PPC [JSE:PPC] dropped 3.04% to close at R4.79. Losses on the resources index were led by diversified mining giant Anglo America [JSE:AGL] which lost 2.68% to close at R348.15, while Kumba Iron Ore [JSE:KIO] fell 2.82% to close at R442.04.

Oil and gas producer Sasol [JSE:SOL] closed 3.02% weaker at R366.59, while commodity trading giant Glencore [JSE:GLN] closed at R46.63 after losing 3.22%.

Mr Price [JSE:MRP] surged on the back of the release of its full-year results which showed positive growth in revenue and profitability. The stock eventually closed 11% firmer at R197.15. Massmart Holdings [JSE:MSM] also got a lift as it climbed 5.81% to end the day at R67.35, while Pick n Pay [JSE:PIK] gained 2.4% to close at R70.97.

Gold miner AngloGold Ashanti [JSE:ANG] rose 8.27% to close at R194.68, while Gold Fields [JSE:GFI] added 7.26% to close at R65.44. Aspen Pharmacare [JSE:APN] managed to gain 4.18% as it closed at R97.94, while Famous Brands [JSE:FBR] lost 5.1% to close at R83.25.

The JSE All-Share index closed 0.31% lower while the blue-chip JSE Top-40 index lost 0.39%. The resources index fell 1.42%, while the financials and industrials indices barely closed firmer as they added 0.27% and 0.02% respectively.

Brent crude weakened significantly because of Trump’s tariff threats against Mexico. The commodity was trading 2.62% weaker at R63.62/barrel.

At 17:00, gold was up 1.09% at $1302.49/Oz, platinum was 0.36% weaker at $793.20/Oz, and palladium had lost 1.97% to trade at $1342.20/Oz.

JSE winners and losers May 31

Musa Makoni is a trading specialist at Purple Group.

jse  |  markets  |  currencies  |  equities
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