Another cautious start faces the JSE on Tuesday as Nedbank reports
South African stocks, which fell sharply on Monday amid a global sell-off, could be in for another weak start on Tuesday as risk aversion continues after the trade war between the world’s two biggest economies intensified.
Major stock markets plunged on Monday, with the S&P 500 Index closing 3% down overnight, after China retaliated to additional tariffs on exports to the US by halting imports of American agricultural products.
US President Donald Trump then responded to the depreciation of the yuan by saying that China manipulates its currency. The US will turn to the International Monetary Fund for support.
“Markets are likely to sustain further losses today amid the risk-off sentiment,” analysts at Singapore’s OCBC Bank said on Tuesday.
“Going forward, the shedding of gloves by both the US and China may imply more choppy trading conditions ahead, even though the immediate impact of the currency-manipulator label is limited,” OCBC said. “The more immediate threat may be that the Trump administration hikes the current tariffs to beyond 25%, which may in turn force the Federal Reserve’s hand to cut rates at the September meeting.”
Asian markets plunged in early trade on Tuesday, but recovered some of their losses through the morning session.
Hong Kong’s Hang Seng Index was 0.7% down at the lunch break, while the Shanghai Composite lost 2.4%. Japan’s Nikkei 225 shed 1%, Korea’s Kospi 0.9%, and Australia’s main benchmark 2.2%.
Chinese Internet and gaming giant Tencent, which influences the JSE all-share index via major shareholder Naspers, fell 0.3% in Hong Kong.
JSE-listed miner BHP Group fell in early trade in Australia but was 0.2% up in the afternoon session.
Nedbank is due to report interim results on Tuesday, as is Royal Bafokeng Platinum.
The miner has warned that it will report a headline loss per share of between 65c and 75c, versus a headline loss per share of 6c previously.
No major data releases are expected locally, while the US will publish a monthly job-openings report.
The rand, which slid on Monday along with other emerging-market currencies, regained some lost ground on Tuesday morning.
The local currency was trading at R14.82/$, R18.02/£ and R16.60/€.
Source: businesslive.co.za
