JSE dips on global risk aversion
The JSE fell fairly sharply on Tuesday, while rand retreated to a one-month trough against the dollar, indicating a generalised global risk-off environment.
The all share was off nearly 1% at 73,101.25 in midmorning trade, extending the month-to-date losses to just shy of 5%, suggesting that markets may have moved ahead of themselves in December when they jumped on the expectation that the US Federal Reserve will loosen its monetary policy in 2024.
The JSE’s losses were widespread across the sectors on the day, indicating global risk aversion.
However, there were pockets of strength in individual counters such as Capitec, which rose 2% to R2,011.09.
Europe’s major markets were weaker on Tuesday, with the UK’s FTSE 100 losing 0.41% and France’s CAC 40 slipping 0.33% following the negative lead from Asia, where Hong Kong’s Hang Seng shed 2% in its biggest one-day loss for the year so far.
US stock futures pointed to a weaker start on Wall Street later in the day, following a public holiday on Monday.
The rand was down just more than 1% to R18.86/$ in line with global risk-off trade and broad-based dollar strength.
Commodity markets were mostly lower, with platinum losing 1% to $905.43% as a result of the strong dollar, which tends to have an inverse relationship with commodity prices.
The release of China’s fourth-quarter GDP figures on Wednesday is likely to drive short-term sentiment. Commodity markets are especially sensitive to China because it is the biggest consumer of commodities.
The JSE is also heavily weighted towards big resource and industrial shares, which in turn rely heavily on China for its products.
Over the past year, the JSE underperformed its global counterparts primarily because of the resource market, which fared poorly due to slackening demand in China.
Source: businesslive.co.za
