JSE opens lower in cautious trade on heightened threat of trade war

The JSE opened weaker on Monday amid poor emerging-market sentiment, in what promises to be another choppy week for developing markets.

Trading was mixed at the opening with banks up but property down, while Naspers lost further ground after falling 3.5% last week.

US jobs data released on Friday exceeded expectations, raising the possibility of a more aggressive stance on interest rates by the US Federal Reserve. The market has priced in at least two further hikes in 2018, including one later in September.

The rand had retreated from the extreme levels it reached last week.

“However, headlines regarding former president Jacob Zuma planning a comeback against President Cyril Ramaphosa over the weekend have once again created a backdrop of caution,” Nedbank Corporate and Investment Banking analysts said.

On the international front, continued talk from US President Donald Trump regarding further escalation of the trade war with China also does not bode well for emerging markets, they said.

The rand was trading largely unchanged at about R15.24 to the dollar. Analysts expect the rand to remain range-bound between R15.06 and R15.68 over the short term.

The Dow closed 0.31% up on Friday. On Monday, the Nikkei 225 was up 0.3% but the Hang Seng dropped 1.6%.

Brent crude was up 0.65% to $77.51 a barrel.

At 9.40am the all share was down 0.14% to 56,989.40 points and the top 40 dropped 0.09%. Property lost 0.57%, food and drug retailers 0.24% and industrials 0.2%. Banks lifted 0.36% and platinums 0.24%.

Sasol was an early favourite, rising 0.85% to R567.

Richemont was up 1.74% to R130.76. Sales for the five months to August rose 25% at constant exchange rates.

Sun International added 2.61% to R59.

Nedbank rose 0.83% to R264.93 but Absa lost 0.08% to R155.87.

Steinhoff fell 2.81% to R2.42, Resilient 1.31% to R53.50 and Fortress B 0.83% to R15.47.

Consumer goods company AVI rose 1.46% to R113.28. Group operating profit was up 7% to R2.55bn for the year to end-June and net profit increased 8% to R1.67bn.

Famous Brands lost 1.64% to R98.36.

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