JSE drops as investors ponder health of global economy

The JSE was lower on Wednesday morning tracking most global markets, as investors ponder the state of the global economy following weak manufacturing data in the US and the eurozone.

The US Institute of Supply Management (ISM) manufacturing index dropped to a decade low in September weighing on the country’s market. The eurozone manufacturing purchasing managers’ index fell to its lowest level in seven years in September.

The weak economic data from the US has fuelled expectations that the US Federal Reserve may move to cut the interest rate further in 2019.

“The markets are in the process of pricing in an October Fed rate cut and while we may get some signals from the slew of Fed speakers, including chair [Jerome Powell] on Friday, this weeks nonfarm payroll report has taken on even more significant importance in my view in the wake of the dreadful ISM data,” market strategist at Axitrader Stephen Innes said.

“Not so much from a Fed policy perspective but from a tail risk perspective. If the headline number leaks significantly lower than expectations, equity market could sell large as recessionary fears take hold,” Innes said.

Earlier, Japan’s Nikkei 225 lost 0.49% and Hong Kong’s Hang Seng 0.3%. In Europe the FTSE 100 dropped 1.48%, France’s CAC 40 1.27% and Germany’s DAX 0.91%. 

At 11.01am, the JSE all share was down 1.24% to 54,264.2 points and the top 40 has lost 1.4%. Banks fell 1.2% and resources 1.76%. 

Bidcorp added 0.21% to R325.30 after the company said on Wednesday that it had agreed to sell its UK logistics business, Best Foods, to a subsidiary of Tesco.

Sirius Real Estate was down 1.02% to R13.58. The property owner said on Wednesday that it had extended its banking facility with Berlin Hyp to a total of €180.2. 

[email protected]