JSE closes weaker on renewed global trade jitters, while oil price falls

The JSE closed weaker on Thursday in renewed risk-off trade following a weak opening on the Dow and as European markets were all in the red.

Concern about an escalating global trade war increased after the EU announced counter-tariffs against the US in response to those already announced by the world’s largest economy.

At the same time the US has threatened to implement a further $200bn in tariffs on China, should it retaliate against earlier tariffs.

“Our bourse continues to take its cue from tentative trade in global markets on the US and China trade-war narrative,” said IG SA senior market analyst Shaun Murison.

He said the dollar had strengthened, which weighed on commodity prices in general. “Gold shares were among the weaker performers on the day,” Murison said.

The Dow was 0.9% lower at the JSE’s close and set to close weaker for an eighth straight session. The FTSE 100 was 0.9% lower following a rebound in the pound after the Bank of England earlier kept rates unchanged. However, the vote in the monetary policy committee (MPC) was a 6-3 split, with the market pricing in a rate hike later in the year — likely to be August — amid subdued economic growth in the UK.

Earlier, the rand weakened after the South African Reserve Bank’s quarterly bulletin reflected a current-account deficit of R2.29bn in the first quarter of 2018, amounting to 4.8% of GDP, from 2.9% in the previous quarter. However, some gains by the euro in volatile trade against the dollar later supported the local currency to about R13.60 to the dollar, from Wednesday’s R13.6562.

Emerging-market jitters were likely to continue until after the Turkish election at the weekend. A strong showing by Turkish leader Recep Tayyip Erdogan could drive the lira lower, analysts said.

Mining stocks were weaker on a softer Brent crude price amid indications that oil cartel Opec members will reach an agreement at their Vienna meeting on Friday, to increase production and reverse presently reduced output targets.

Brent crude was 0.7% lower at $73.70 a barrel at the JSE’s close.

The all share closed 0.74% lower at 56,234.40 points and the top 40 also dropped 0.74%. The platinum index lost 2.45%, industrials 1.17%, the gold index 0.63%, resources 0.6% and general retailers 0.59%. Banks rose 0.8% and food and drug retailers 0.41%.

Anglo American was down 1.25% to R299.41.

British American Tobacco gained 1.56% to R693.47.

Anglo American Platinum plunged 4.85% to R320.31.

Barclays Africa rose 1.97% to R161.49 and FirstRand 1.44% to R59.85.

Discovery softened 0.75% to R142.55 after the government gazetted the long-awaited National Health Insurance Bill, as part of a universal healthcare scheme.

Brait jumped a further 6.87% to R42.80.

Naspers lost 2.22% to R3,207.87 ahead of the release of the group’s final results to end-March on Friday.