JSE slips on Naspers as traders eye possible gridlock in Washington

The JSE dipped a little on Tuesday morning, with global markets producing mixed results as investors waited for the outcome of the US midterm elections.

Most Asian markets were higher, although Tencent was lower in Hong Kong, with Naspers losing 2.43% to R2,854.88 in morning trade. 

Banks and retailers were also lower, despite a slight firming of the rand overnight. The local unit was at R14.19 to the dollar in morning trade.

At 9.30am the all share was down 0.68% at 54,540 points and the top 40 had lost 0.84%. Food and drug retailers had given up 1.21%, industrials 1.11% and banks 1.03%.

The elections are expected to be key test of President Donald Trump, and could have wider ramifications for US economic and trade policy in the short to medium term.

Should the Republicans lose control of the House of Representatives — as expected — this could point to legislative gridlock going forward, analysts said.

Markets could look kindly on this, as it would lessen the risk of radical policy and regulatory changes, which would favour risk assets — the lira and rand being the obvious beneficiaries, said Rand Merchant Bank analyst Nema Ramkhelawan-Bhana.

“A surprise Republican win in both chambers could embolden Trump to take stronger trade measures, spurring US dollar strength and amplifying asset price volatility,” she said.

Local news is expected to be out of the limelight this week, with investor focus also on Thursday’s US Federal Reserve policy announcement. No change in interest rates is expected.

Gold was flat at $1,230.43/oz while platinum rose 0.43% to $867.45. Brent crude was flat at $72.66 a barrel.

Pan African Resources rose 3.92% to R1.59, after earlier reporting that it was confident of achieving its production guidance for the 2019 financial year, having ramped up output in the quarter to end-September.

Harmony Gold was off 0.57% to R25.98, after saying earlier that gold production in the quarter to end-September rose 30% year on year, but dipped 2% quarter on quarter.

Absa was down 1.55% to R159.73.

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