ANALYSIS: Geopolitical factors hurt financial markets
Dr Chris Harmse
Most global bourses moved nervously up and down as new tit-for-tat tariff increases between the US and China increased uncertainty.
On the domestic front, the announcement by the ANC that it would amend Article 25 of the constitution to include the conditions under which land appropriation without compensation may take place, caused huge uncertainty among domestic and global investors.
Share prices on the JSE took a hiding at the beginning of last week.
The Hawkish trend of the US Federal Reserve on future interest rate increases and the strong increase in South Africa’s unemployment rate to 27.2percent during the second quarter, also contributed to bearish movements on the share, capital and foreign exchange markets.
The US job numbers that showed that unemployment had fallen to one of the lowest levels at 3.7percent during July, helped a big recovery in share prices on Friday.
On the JSE, the all share index lost 843 points, or 1.5percent, of its value from the previous Friday up to last Thursday. The index then again gained 647 points on Friday alone and ended the week on 57118 points, or 195 points, down for the week.
The industrial 25 index lost 1percent, while the resources 10 gained 0.6percent over the week, helped by a weaker rand and somewhat higher commodity prices.
Fears for further US interest rate hikes and disinvestment from South Africa on the land issue, initially had negative effects on the banking and financial sectors during the first part of last week. The stronger rand on Friday, however, also helped shares to recover sharply. The Financial 15 index ended last week 0.7percent higher.
The rand opened last Monday on R13.15 to the dollar and traded even stronger on R13.09 last Tuesday. But given the fears of US interest rate increases and the high local unemployment figures, the rand had weaken sharply later in the week.
-BUSINESS REPORT
Source: iol.co.za
