JSE starts week lower in jittery trade as global markets fear further trade wars

The JSE started the week lower on Monday, recording broad-based losses as poor sentiment toward emerging markets drove most of the major indices down.

Rand hedges pared earlier gains by the close, after trading strongly during the day in expectation of further weakness in the local currency. The rand was largely unchanged at about R15.20 to the dollar as a firmer euro kept a lid on further losses.

The rand remained steady despite finance minister Nhlanhla Nene’s warning that tax revenue collection might come under further pressure in 2018 because of the recession.

Naspers struggled to find momentum after falling 3.5% last week, losing another 1.09% to R3,117.

Platinums were lower despite the metal price rising 1.6% to $795. It is still down 14.3% in 2018. Resources rose marginally near the close.

The all share is now firmly in weaker territory, having lost nearly 5% in 2018 so far, after rising above 60,000 points at the end of August, recording its first gains from the slump in the middle of 2018.

Concern about heightened trade tension kept buyers on the sidelines. Chinese markets lost further ground after Asian markets experienced their sharpest weekly drop in six months last week. This followed US President Donald Trump’s threat to impose tariffs on almost all Chinese imports, of more than $550bn.

This comes as China has increased its trade surplus with the US over the past five months. FxPro analysts ascribed that to US companies increasing purchases from China before the introduction of the envisaged 25% tariffs. “The recent threats of expanding tariffs for almost all exports can lead to even bigger trade deficits in the US and China in the next couple of months, but this will almost inevitably be followed by a serious downturn.”

The strength of the dollar this year also has put pressure on emerging markets and triggered currency crises in countries including Turkey and Argentina. The question is whether such woes will extend to the global economy, weakening demand for US and European exports, Dow Jones Newswires reported.

US jobs data released on Friday exceeded expectations, raising the possibility of a more aggressive stance on interest rates by the US Federal Reserve. The market has priced in at least two further hikes in 2018, including one later in September.

The all share closed 0.62% lower at 56,715.30 points and the top 40 was 0.57% down. Platinums lost 2.31%, general retailers 1.44%, food and drug retailers 1.08%, banks 1.02%, financials 0.87% and industrials 0.79%. Resources rose 0.11%.

After gaining nearly 1% in morning trade, Sasol closed flat at R561.90.

Richemont was up 068% to R129.40. It earlier reported sales for the five months to August rose 25% at constant exchange rates.

Sun International added 1.5% to R58.36.

Standard Bank lost 1.82% to R177.70 and Nedbank 1.04% to R260.

Sanlam dropped 2.09% to R76.33.

Resilient fell 0.76% to R53.80 but Fortress B rose 0.38% to R15.66.

Consumer goods company AVI gained 1.33% to R113.14. It earlier reported 7% growth in group operating profit to R2.55bn for the year to end-June, while net profit increased 8% to R1.67bn. The group also declared a special dividend.

MTN slipped 0.9% to R74.09.