JSE could lose 2% on Friday as Donald Trump ups trade-war ante

Threats by US President Donald Trump to impose an additional 10% tariff on $300bn worth of Chinese goods at the end of August put the JSE under pressure on Friday morning, with the local bourse on track for its worst daily loss in two months.

Trump’s threat overnight has confirmed the US and China are not yet closing in on a deal, offering the prospect of a prolonged and economically damaging trade conflict between the world’s two largest economies. Equities, including the JSE, had found support earlier on news that talks would resume in Shanghai this week.

“Expectations for the talks were low, but few expected the week would end in more tariffs,” Oanda analyst Craig Erlam said in a note.

Asian and European markets were sharply down, with Hong Kong’s Hang Seng falling 2.44% by 9.45am, while the French CAC 40 had lost 2.34%.

The all share gave up 1.86% to 56,157.5 points and the top 40 lost 2.07%. Industrials had given up 2.17% while gold miners had risen 2.83%.

Gold was down 0.46% to $1,437.98/oz and platinum 0.52% to $848.08. Brent crude had risen 1.02% to $61.70 a barrel, having plunged almost 5% on Thursday.

Before Trump’s threat, investors had been a little wary, following a hawkish tone by US Federal Reserve chair Jerome Powell on Wednesday. Although the Fed cut rates by 25 basis points, Powell played down the chances of further cuts.

Diversified miner Glencore fell 2.26% to R43.74.

Sasol lost 3.6% to R305.39, a nine-year low.

Gold Fields had added 1.04% to R75.90, while the JSE’s gold index was up almost 3% at the same time. Gold Fields said earlier that headline earnings per share were expected to fall between 10% and 15% in the six months to end-June. 

Standard Bank was down 2.05% to R175.01 and Absa 2.08% to R154.71.

Naspers gave up 2.69% to R3,544.8.3.

Truworths fell 1.1% to R61.81, having earlier dropped as much as 4%, after saying that it had impaired the carrying value of assets within its UK-based footwear chain Office by £97m.

Mondi fell 4.24% to R288.73, extending Thursday’s 3.35% loss, which came despite it saying that pre-tax profit for the half-year to end-June rose 29% from the prior period, with the paper and packaging group raising its dividend 27% to 27.28 euro cents.

Focus on Friday will be on US nonfarm payrolls data, with US economic data expected to be closely scrutinised as investors try to measure the chances of further Federal Reserve rate cuts.

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