JSE retreats on global growth concerns

The JSE, which has climbed 10.8% so far this year, gave up some of those gains on Thursday morning as global sentiment soured on concerns about the state of major economies.

On Wednesday, central banks in Europe and the US added to worries that global economic growth is cooling. Both monetary authorities kept rates on hold, and the European Central Bank (ECB) warned of slower growth in the region.

Meanwhile, US President Donald Trump threatened new tariffs on imports from the EU. This comes as the US is said to be close to finalising a trade deal with China.

Asian stocks were lower on Thursday, with the Hang Seng Index down 0.9% and the Shanghai Composite 1.6% lower.

At 10.40am, the JSE all-share index was 0.7% down at 57,991 points, with the top-40 index 0.8% lower. Declines were registered across the board, with retailers among the biggest losers.

JSE-heavyweight Naspers was 1.3% down at R3,554.40, even though Tencent was up in Hong Kong. BHP Group was 0.6% lower at R351.48. 

Retailers Massmart and Spar Group were down 4.16% and 3.41%, respectively, while Woolworths was down 2.30% and Mr Price  2.32%.

Earlier, Altron’s shares jumped 4.2% to R20.70, the best level since October 2014, after the technology group said earnings in the year to end-February rose by up to 62%, however, by mid-morning the price was down to R20.20.

Gold was 0.3% lower at $1,304.02/oz while platinum had added 0.364% to $904.42. Brent crude was 0.17% down at $71.46 a barrel.

The rand, meanwhile, was weaker against major currencies after strengthening past R14/$ on Wednesday. It was 0.23% down against the dollar at R13.94, 0.12% weaker against the pound at R18.22, and 0.293% down against the euro at R15.72.

“With today being a light data day, we expect the current sentiment to hold and we could see the rand trying to break below the R13.90 level as the market awaits events that could impart some further momentum,” said Andre Botha, senior dealer at TreasuryOne.

Stats SA is scheduled to publish mining and manufacturing data for February on Thursday. In the US, the producer price index and jobless claims data are due.

Late on Wednesday, the UK and EU agreed to extend the deadline for Brexit by six months to allow UK Prime Minister Theresa May to find a workable solution. Nigel Driffield, professor of international business at Warwick Business School, said that agreement meant “the cliff edge has been avoided”.

He added, “However, nothing has changed in terms of offering business any certainty. The fundamentals of the economy are strong, but too many projects are on hold and that will not change until we know how and when we are leaving the EU and what impact that will have on international trade.” 

[email protected]