JSE opens in subdued trade as the market awaits new tariffs against China

The JSE opened slightly higher in subdued trade on Thursday amid lower Asian markets as the euro gained on the dollar on views expressed by European Central Bank (ECB) members that the central banks should speed up its rate hikes.

The ECB has not yet indicated when it will begin to hike rates in line with the US Federal Reserve. But it has reduced its asset-buying or stimulus programme and intends ending it toward the end of 2018.

ECB members are said to be troubled about the slow pace of rate hikes, saying that an increase in September or October 2019 was too late, FxPro analysts said.

In response, the probability of a September 2019 rate hike has risen from 69% to 80% in the market. Investors in the money markets are now fully pricing in a 10 basis points hike to the deposit rate in December 2019.

While the first rate move is still a year or more away, its timing is crucial as the ECB will then exit a decade of monetary stimulus. ECB president Mario Draghi’s term ends on October 31 2019.

Asian markets were trading mostly lower in the morning with investors focused on the tariff deadline, which the US is planning to impose on Friday.

The US is set to impose a 25% tariff on up to $34bn worth of Chinese products. Emerging-market currencies were likely to be caught in the crossfire should China retaliate.

Naspers was down 0.53% to R3,390 amid renewed rumours that the group was considering a primary listing in Hong Kong. Chinese internet and gaming company Tencent, of which Naspers owns 31.2%, was only marginally up in Hong Kong trade.

The Dow was closed on Wednesday for a US public holiday. The Nikkei 225 lost 0.78% on Thursday, the Shanghai Composite 0.91% and the Hang Seng 0.47%.

The market is awaiting the release of crucial nonfarm jobs data in the US, also on Friday. The consensus view is for 195,000 jobs to have been created in June from 223,000 in the previous month. A better figure is sure to support the dollar, as it would increase the likelihood of a more hawkish stance from the Fed.

Brent crude oil held steady at $77.89 a barrel, despite US President Donald Trump restating his call for oil cartel Opec to bring down the price.

At 10.05am the all share had risen 0.22% to 57,729.40 points and the top 40 was 0.25% up. Resources were up 1.38%, the platinum index 0.84%, general retailers 0.61% and property 0.45%. Industrials slipped 0.19%.

Glencore rebounded 4.46% to R60.37, after announcing that it would buy back some of its own shares.

British American Tobacco lost 0.64% to R707.97.

Anglo American Platinum rose 1.52% to R366.82. The group announced on Thursday morning that it had disposed of its 33% interest in the Bafokeng Rasimone mine for R1.86bn.

Steinhoff dropped 5.68% to R1.66 and Steinhoff Africa Retail 0.3% to R16.82.

Nepi Rockcastle lifted 0.77% to R123.73.