JSE opens weaker as US bonds hit multi-year highs

The JSE opened softer on Friday with all the major sectors weaker as the effects of higher US bond yields kept US markets on the back foot.

Asian markets were also weaker after US Vice-President Mike Pence accused China of interfering in the US midterm elections in another salvo from the administration of President Donald Trump against the world’s second-largest economy.

The Dow closed 0.75% lower on Thursday. The Nikkei 225 was 0.8% lower and the Hang Seng lost 0.22%.

Naspers was 1.13% lower at R2,890.94, falling for the fourth successive session and extending losses for the year so far to 16.5%.

Traders are eyeing US nonfarm payroll data due out later in the day, with a consensus that 185,000 jobs were created in the US in September from 201,000 in the previous month.

The market is also likely to pay attention to average hourly earnings growth, which is expected to come in at 2.8% from 2.9% in the previous month. Unemployment could be lower at 3.8% from 3.9%.

The full employment numbers in the US is likely to result in higher inflation at some point and any higher nonfarm number is bound to support the dollar, which was hovering around $1.15 to the euro in early-morning trade. 

The US 10-year treasury was steady at 3.20%. Its recent spike to the highest level since 2011 shows that rising inflation will lead to a more hawkish stance from the US Federal Reserve against the backdrop of a strong US economy, analysts said.

TreasuryOne senior dealer Andre Botha said bumpy trade in the rand could be the likely outcome in the afternoon should the US nonfarm data exceed expectations.

“The surge in the dollar and the expectation of a good jobs number print is due to the positive employment data that came out earlier in the week,” he said.

The rand was at R14.7952 to the dollar from R14.8676.

Brent crude was at $84.98 a barrel.

At 9.47am the all share was 0.95% lower at 54,510.10 points and the top 40 had lost 1.12%. Industrials were down 1.18%, banks 1.13%, general retailers 1.05%, resources 1.02% and property 0.65%.

Anglo American slipped 1.76% to R328.41.

British American Tobacco gained 1.99% to R670.94.

FirstRand lost 1.21% to R61.88 and Standard Bank 1.16% to R164.08.

Among retailers, Massmart Holdings lost 1.75% to R93.34 and Woolworths 0.94% to R47.20.

Intu Properties rocketed 23.34% amid reports that it was a takeover target.

Famous Brands was 2.91% lower at R97.90.