JSE opens weaker as risk-off sentiment hits emerging markets

The JSE opened weaker on Friday on increased risk perceptions towards emerging and European markets following the European Central Bank’s (ECB) decision to end its easing policy by the end of 2018.

With the US already hiking rates in an environment of steady growth and relatively subdued inflation, funds are flowing to US markets, where higher yields on investments can be earned with less risk.

BlackRock highlighted the renewed reality in a statement on Thursday, saying heightened political event risks were likely to remain for some time.

The risk areas mentioned include uncertainty around the policies of the new Italian government, Brexit, negotiations around the North American Free Trade Agreement (Nafta), trade conflicts and national elections in Brazil, Mexico and elsewhere.

“These were all set to percolate over the next months,” BlackRock said.

The volatile trade on Thursday saw the rand lose 30c against the dollar in minutes after earlier recording gains on the ECB decision, which resulted in the euro tumbling and global bond yields falling.

After stabilising last week, the Turkish lira was again weaker on Friday despite the Turkish central bank having hiked rates, while the dollar held fast below $1.16.

The Dow closed 0.10% lower on Thursday. Asian markets were mixed on Friday amid reports that US President Donald Trump would unveil a list targeting $50bn of Chinese goods for tariffs on Friday.

The Nikkei 225 gained 0.5% but the Hang Seng lost 0.39%.

At 10am the all share was 0.17% lower at 58,394.30 points and the top 40 had lost 0.22%. Banks lost 1.76%, financials 1.01% and resources 0.38%. The platinum index rose 0.4%, industrials 0.32% and gold 0.17%.

Anglo American lost 1.66% to R312.81.

Anheuser-Busch InBev rose 1% to R1,315.78.

Standard Bank lost 2.46% to R202.85 and Barclays Africa 2.11% to R162.18.

Dis-Chem was down 1.32% to R26.96 but Clicks rose 0.4% to R202.80.

Nepi Rockcastle lost 1.38% to R125.14.

Naspers added 0.7% to R3,358.38.

Source: businesslive.co.za