JSE closes lower as Massmart slumps in risk-off trade

The JSE closed weaker on Thursday on increased risk-off sentiment following US President Donald Trump’s threat of higher tariffs on car imports into the US raised the possibility of escalating global trade tension.

The latest development followed Trump expressing dissatisfaction at the progress of the Chinese trade talks, despite China announcing reduced tariffs on certain imports from the US.

Gold shares found favour on a firmer gold price, which rose 1% on the news that Trump had cancelled his proposed Singapore meeting with North Korean leader Kim Jong-un in June.

The gold price was 0.93% up at $1,305.45 an ounce at the close.

At the same time, the Dow was 0.96% lower as global automotive companies came under pressure. Trump is asking for new tariffs of as much as 25% on automobile imports, according to those familiar with his request, FxPro analysts said. Trump’s action elicited strong reaction from German industry spokespeople, with Daimler and Volkswagen (VW) shares falling more than 2% on the DAX. Earlier, Nissan, Mazda and Toyota shares came under pressure in Tokyo.

Local retailers were weaker on a disappointing trade update from Massmart, with its shares plunging 18%.

After edging up earlier, banks also lost ground after the South African Reserve Bank’s decision to keep interest rates unchanged, which was as expected. “The Bank struck a hawkish tone, and although inflation will pick up this year, a hike is unlikely,” said Capital Economics analyst John Ashbourne.

Earlier, the decision by the Turkish central bank to hike interest rates by three percentage points boosted emerging-market sentiment. The rand firmed marginally on the news, but faded toward the close again, as the Turkish lira plunged a further 4.6% to the dollar.

Weak local company results, released on the day, put a damper on confidence in the market. Although some of the results came in according to guidance, with negative forward-looking statements seeing sellers dominate trade.

The all share closed 0.6% lower at 56,699.20 points and the top 40 shed 0.5%. General retailers fell 3.81%, food and drug retailers 1.49%, resources 0.92%, financials 0.76%, and banks 0.49%.

Sasol jumped 2.41% to R472.95.

Barclays Africa slipped 1.16% to R158.66.

Life insurer and asset manager MMI fell 3.57% to R19.18. The group said earlier that diluted core headline earnings for the nine months to end-March were down 5% on the prior period.

Massmart ended the day 17.96% lower at R115. On Thursday morning it reported sales growth of 0.8% for the first 19 weeks of the 2018 financial year.

TFG shed 7.37% to R180 after it said net profit grew a muted 3.6% to R2.4bn in the 2018 financial year.

Property group Capital & Counties rose 4.14% to R50.30 in choppy trade. It earlier announced a de-merger on Thursday by splitting the company into two separately listed businesses based around its prime central-London estates. One will focus on Covent Garden and the other on Earls Court.

Tiger Brands dropped 4.58% to R333.29. The group said on Thursday that pre-tax profit from continuing operations fell 18% to R1.9bn in the six months to end-March.

Mediclinic plummeted 8.82% to R103.59 after reporting that annual revenue rose 4% to £2.8bn.

Famous Brands rose 0.78% to R103.60 after reporting headline earnings per share (HEPS) were down 8% for the year to end-February.

The top 40 Alsi futures index lost 0.51% to 50,621 points. The number of contracts traded was 21,635 from Wednesday’s 23,304.