JSE starts week poorly as Angela Merkel fights renewed coalition battle

The JSE started the second half of the year on a negative note on renewed risk-off concern out of Germany, where Chancellor Angela Merkel is facing more challenges.

After concluding a deal last week on migrant access to the EU, new strain developed at the weekend with Merkel’s CSU coalition partner expressing dissatisfaction with the deal.

According to the deal, new “controlled centres” for asylum seekers would be set up, while migrants would be distributed across the entire EU on a voluntary basis.

However, interior minister Horst Seehofer threatened to resign following sharp differences with Merkel, putting the German chancellor’s fragile three-month old coalition at risk.

“The increase in the number of migrants being accepted by Germany is fracturing the government,” FxPro analysts said.

The JSE all share delivered one of its best performances on Friday, jumping more than 3%, ending the second quarter 3.85% up following a rout of 6.7% in the first. The all share is still down 4.59% in 2018.

The stronger euro supported a stable rand last week, but on Monday the local currency was again trending weaker as the dollar firmed against the euro, reaching $1.629 from $1.1685 in morning trade.

Brent crude slipped 1.15% to $78.30 after rising sharply at the end of last week on indications that oil supplies from Iran might be halted by US President Donald Trump’s sanctions policy.

The Dow closed 0.23% up on Friday following slightly lower-than-expected GDP data. Asian markets remained under pressure, with the Nikkei 225 down 2.21% and the Shanghai Composite 2.52% lower on Monday. The Hang Seng was closed for a public holiday.

At 10am the all share was 1.45% lower at 56,773.6 points and the top 40 dropped 1.7%. Resources lost 1.83%, industrials 1.52%, banks 1.49%, food and drug retailers 1.23% and financials 1.06%.

Anglo American dropped 2.21% to R300.65 and Sasol 0.79% to R498.89.

British American Tobacco slipped 0.11% to R691.16.

Standard Bank lost 2.17% to R187.71 and FirstRand 1.96% to R62.64.

Quilter dropped 1.78% to R25.91.

Steinhoff rose 3.1% to R1.33. It restated the numbers on Friday, with losses coming in at €12.8bn, more than double the estimate of €6bn in December 2017.

Mr Price dropped 1.76% to R222.28 and Woolworths 1.05% to R54.87.

Nepi Rockcastle dropped 1.8% to R120.25.

Naspers was down 3.1% to R3,376.91.