JSE opens weaker as probable new US tariffs unsettle markets

The JSE opened slightly weaker on Tuesday on increased global jitters ahead of a probable new round of tariffs by US President Donald Trump against China, raising the prospect of a global trade war.

Gold stocks slipped on a stronger dollar, but resources recovered on a slightly weaker rand and a higher Brent crude price.

On Monday, US treasury secretary Steven Mnuchin attempted to allay fears amid media reports detailing plans to impose restrictions on Chinese investment in US companies and on tech exports to China.

The Dow closed 1.33% lower on Monday at its worst level in more than a month. The index fell below the important 200-day moving average for the first time since June 2016, and so raised the spectre of further market losses.

The Shanghai Composite slipped 0.52% on Tuesday, increasing losses from its January high to 20%. The Nikkei 225 was flat and the Hang Sang lost 0.3% in cautious trade.

US Company Harley Davidson’s plans to shift some production out of the US put a damper on sentiment. The plan was announced in order to avoid paying tariffs when exporting its products.

The EU has implemented higher retaliatory tariffs on the iconic US company after Trump’s earlier tariffs against the union.

This is a blow for Trump’s trade policy, FxPro analysts said. “Businesses have to implement extraordinary measures in order to weather the storm as trade relations break down.”

Global markets have been on tenterhooks since last week from a spike in risk-off sentiment due to the prospects of further escalation of the US and China’s trade conflict.

At 10.01am the all share had dropped 0.12% to 55,820.20 points and the top 40 lost 0.09%. The gold index shed 1.09%, the platinum index 0.91%, property 0.72%, financials 0.63% and banks 0.59%. Resources rose 0.66%.

Kumba Iron Ore lost 1.74% to R281.01 after releasing a disappointing trading update for the six months to end-June.

Sibanye-Stillwater dropped 5.12% to R8.90. A miner died after an incident at a mine in the group‚ the company said on Tuesday.

Quilter rose 1.12% to R27.10 on its second day of trade.

Dis-Chem Pharmacies shed 1.38% to R26.50.

Among property stocks, Growthpoint was 1.04% lower at R25.72, Redefine 0.95% at R10.44 and Fortress B 1.29% at R14.55.

Naspers lost 0.19% to R3,201.