JSE set for sharp declines on Monday as trade war escalates

The JSE all-share index will probably fall on Monday morning after the trade war between the world’s two largest economies took a turn for the worse.

US President Donald Trump “had a complete hissy fit” on Friday, first in response to China’s retaliation against his decision to raise tariffs on Chinese imports, and then against Federal Reserve chair Jerome Powell’s hawkish approach to rate cuts, said Ray Attrill, head of foreign exchange strategy at National Australia Bank. 

“My only question is, which is our biggest enemy, Jay Powel [sic] or Chairman Xi,” Trump said in a tweet, referring to his Chinese counterpart.

“Referencing the Fed chair as the enemy is, frankly, just par for the course, but referencing President Xi now as the enemy rather than ‘my friend’ is a lot more serious,” Attrill said.

“Buckle up for some serious market turmoil today.”

Trump’s comments sent markets into a tailspin late on Friday and into the new week.

The S&P 500 index slumped 2.6% on Friday, while Hong Kong’s Hang Seng index was 2.8% down at the lunch break on Monday.

The Shanghai composite was 1% lower, Japan’s Nikkei 225 retreated 1.9%, and Korea’s Kospi fell 1.3%. Australia’s main benchmark declined 1.4%.

Chinese internet and gaming giant Tencent, which influences the direction of the JSE via major shareholder Naspers, slumped 3.7% in Hong Kong.

JSE heavyweight BHP Group lost 1.9% in Australia.

Meanwhile, private education group Stadio Holdings is due to report half-year results on Monday.

The company said earlier in August headline earnings per share in the six months to end-June rose 37%-54%.

Statistics SA will publish data on tourism and on liquidations and insolvencies.

Elsewhere, Germany will publish a business climate survey and the US will release figures on durable-goods orders.

The rand started the week on the back foot as the market turned more risk-averse.

The local currency was trading at R15.34/$, R18.82/£ and R17.09/€.

Gold rose once again to reach $1,540.96/oz. That should aid JSE-listed gold miners on Monday.

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