The JSE ended weaker on Monday after a fairly patchy session, while the rand extended its winning streak against the dollar, suggesting that traders think the US Federal Reserve might not be as aggressive in hiking interest rates as initially thought because of weak economic data.
The JSE all share index ended down 0.42% at 68,642 points, while the top 40 lost 0.51%.
The weaker session comes after the all share index logged its biggest monthly gain in July — 4% — since late December, according to Bloomberg data, boosted by improving sentiment on global markets.
Global luxury goods maker Richemont accounted for the bulk of last month’s gains on the local share market after climbing 14.5% in July.
Industrial stocks including Shoprite and Tiger Brands were notable gainers during the month, but they don’t necessarily move the needle in the overall market.
“The outlook for the top end of the market is very difficult to predict because it’s largely driven by sentiment on the global economy,” said Graeme Körner, director and portfolio manager at Körner Perspective. “It’s difficult to predict the near term future of the commodity cluster for instance, which is not homogeneous.”
The resource market, which constitutes the biggest weighting in the all share, was relatively flat in July due to broadly weaker commodity prices.
Brent crude slumped 7.39% to $99.75 per barrel by 6pm on Monday, in its biggest one-day loss since early July, hobbled partly by fears of a global recession, which hit demand. Other commodity prices have come off substantially since touching historic highs in the first half of 2022.
Fears of a global economic slowdown are increasingly feeding into market perceptions that the Fed and other central banks may dial back in hiking rates aggressively to fight off inflation, which is at multiyear highs in many jurisdictions.
The moderation in rate hike expectations has boosted the rand, which hovered at its highest level against the dollar since early July. The local currency was 0.9% stronger at R16.45/$ by 6pm, having gained more than 2% in about a week.
MTN rallied 2.28% to R142.26 after a trading update in which Africa’s largest mobile operator said headline earnings per share are expected to rise by between 40% and 50% for the half year ended June.
Quilter was up 15.17% to R24.22 after the UK’s Daily Mail reported at the weekend that NatWest was considering making an offer for the London- and Johannesburg-listed wealth manager.