JSE falls 1.62% as Italian political turmoil rattles investors

The JSE slipped in broad-based losses on Tuesday, as the possibility of an eventual exit from the eurozone by Italy put global equity markets under pressure.

The rand and euro dropped against the dollar on intensifying expectation that a failure of populist Italian parties to form a coalition government could result in another election, which many experts said would likely deliver a more powerful mandate for eurosceptic parties, reported Dow Jones Newswires.

“Overall, the events of the past few days have the possibility of creating a vicious cycle for the euro,” said BK Asset Management MD Boris Schlossberg.

US treasuries and gold gained in safe-haven trade, but the weaker rand and weaker local bonds put most domestic stocks under pressure.

Naspers added to the woes by falling 3.65% to R3,088.21, following earlier losses by Hong Kong-listed associate Tencent.

The all share fell 1.62% to 55,935.8 points and the top 40 1.84%. Industrials slumped 2.43%, food and drug retailers 2.38% and banks 1.67%. Gold miners jumped 4.04%.

Rand hedge British American Tobacco dropped 2.1% to R635.87, and Anheuser-Busch InBev 2.07% to R1,166.81.

Harmony Gold leapt 5.73% to R21.60 and AngloGold Ashanti 4.6% to R106.69.

TFG gave up 4.22% to R181.99 and Steinhoff International 9.09% to R1.30.

Shoprite slipped 3.55% to R225.24. Spar lost 1.96% to R187.25 ahead of its interim results to end-March. In the prior period, the company reported headline earnings per share (HEPS) of 475.5c.

Steinhoff Africa Retail (Star), which may undergo a name change to Pepkor, one of its largest assets, was off 0.3% to R16.85. It earlier reported a 49.1% drop in HEPS for the six months to end-March, citing debt obligations to Pepkor management.

Aveng plummeted 15.79% to 32c, after earlier saying its mooted acquisition by Murray & Roberts (M&R) was unlikely to happen.

Vodacom slipped 4.12% to R148.55, after Cell C said it planned to swap its networking agreement, choosing MTN over Vodacom.

At 5.30pm, the Dow was off 1.04% to 24,494.4 points, while in Europe, the DAX 30 had lost 1.49%, the CAC 40 1.26% and the FTSE 100 1.25%.

At the same time, platinum had risen 0.41% to $907.92 an ounce and gold 0.29% to $1,302.48. Brent crude was 0.6% lower at $74.79.

The top 40 Alsi futures index fell 2.07% to 49,756 points. The number of contracts traded was 21,143 from Monday’s 10,796.