JSE opens lower in risk-off trade after $200bn tariff threat by Donald Trump

The JSE opened weaker on Tuesday as risk-off sentiment continued to hammer markets after US President Donald Trump threatened to impose another $200bn worth of tariffs on China.

Trump said the tariffs would come into effect if China “refuses to change its practices”, rattling global markets.

The dollar strengthened in reaction, firming to $1.1583 to the euro while the rand weakened to near the crucial R14/$ threshold, at R13.9168.

However, market reaction among miners and rand hedges were mixed with Naspers trading 1% lower. Retailers and banks were the main losers in early trade.

The only real bright spot on the JSE were gold stocks, which firmed on a higher gold price at $1.28/oz.

“It is expected that the latest instalment of concerns over the US and China entering a potential trade war would result in global stock markets coming under pressure this week,” FXTM analyst Jameel Ahmad said.

Reduced risk appetite was likely to lead to the rand facing additional selling pressure, he said.

However, some analysts say the reaction might have been overdone.

Franklin Templeton analysts said most emerging-market currencies had floating foreign-exchange regimes and intra-and inter-regional trade had taken on greater importance within the emerging-market world.

The direction of the dollar itself is far from certain. Should the US government aggressively pursue policies to boost exports and manufacturing, it may be inclined to promote a weaker US dollar, they said.

The Dow closed 0.41% lower on Monday. Asian markets were lower on Tuesday, with the Nikkei 225 losing 1.77%, the Shanghai Composite 3.78% and the Hang Seng 2.64%.

At 10.01am the all share was 1.05% lower at 56,634.80 points and the top 40 lost 1.13%. General retailers lost 2.1%, banks 1.63%, food and drug retailers 1.42% and industrials 1.36%. The gold index lifted 0.94%.

Kumba Iron Ore was down 1.33% to R285.16.

British American Tobacco rose 1.41% to R668.29, but Richemont shed 1.23% to R122.97.

Standard Bank dropped 1.38% to R187.55, the weakest level since February.

Invicta Holdings gained 0.27% to R36.80 after earlier slumping on weak results.

Life insurers remained under pressure following Liberty’s reported cyber attack. It shed a further 0.51% to R118.39 and MMI Holdings 1.3% to R17.51.

PPC dropped 2.36% to R25.68. It said earlier that headline earnings per share increased 114% to 15c for the year to end-March.

Woolworths lost 3.05% to R53.46 and Mr Price 2.08% to R225.72.

Growthpoint shed 2.63% to R25.68.

Vodacom dropped 1.64% to R131.55.

Naspers was down 1.79% to R3,250.31.