The JSE opened weaker on Wednesday amid continued global risk-off trade as the fallout from the Italian political impasse keeps investors shy of equity markets.
Miners, led by gold, dragged the local market down, while food and drug retailers and banks gained on a firmer rand, trading at R12.56 to the dollar from R12.6935.
The euro clawed back some lost ground against the dollar on Wednesday after the European Central Bank (ECB) said it would continue with plans to phase out its bond-buying programme later in 2018, despite the Italian crisis.
The Dow Jones closed 1.58% lower on Tuesday, the biggest one-day fall in a month. Asian markets continued the lower trend, with the Nikkei 225 falling 1.52% and the Hang Seng 1.42%.
Earlier, Italian bond spreads rose to the highest levels in four years after the Italian President vetoed the nomination for finance minister by the populist government last week.
The resulting collapse in the coalition led to the president appointing a former International Monetary Fund (IMF) director, Carlo Cottarelli, as prime minister. However, Cottarelli is expected to lose a confidence vote in parliament, which will lead to new elections as early as July, FxPro analysts noted.
The Italian Stock market was down 2.66% with losses extending after hours to levels not seen since July 2017.
Although the rand has been relatively robust against the greenback, a stronger dollar usually negatively affects emerging markets as a whole.
“A strong dollar value generally means weaker global trade and more expensive dollar debt, which is obviously not good for emerging markets,” said Schroders analyst Craig Botham.
Meanwhile, US President Donald Trump’s administration sent a sudden, harsh message to its Chinese counterparts, saying the US was moving forward with its threat to apply tariffs on Chinese imports and other actions to restrict Beijing from accessing sensitive US technology, Dow Jones Newswires reported.
At 10am the all share was 0.15% lower at 55,853.90 points and the top 40 had fallen 0.14%. The gold index lost 1.25%, resources 0.45%, property 0.2% and industrials 0.16%. Banks rose 0.94% and food and drug retailers 0.73%.
Anglo American slipped 0.79% to R292.67.
AngloGold Ashanti lost 1.8% to R104.77.
FirstRand jumped 1.85% to R61.11.
Steinhoff International plummeted a further 4.62% to R1.24, but Steinhoff Africa Retail gained 0.89% to R17.
Spar rose 2.63% to R192.17 after reporting headline earnings per share rose 13.8% to end-March
Telkom added 2.23% to R52.34.
Naspers was down 0.79% to R3,063.88.