JSE suffers worst day in three months as global markets slump

The JSE experienced its worst one-day loss in more than three months on Tuesday, tracking declines across global equity markets, prompted by a sell-off of technology stocks.

As the JSE closed the Dow was almost 2% lower, turning negative for the year, while local market heavyweight Naspers slumped 7% on the day.

Revised production expectations from Apple for its iPhone products prompted a technology-stock sell-off on Monday.

Investors had been nervous about the outlook for Apple and its flagship devices since the firm announced that it would no longer be reporting a breakdown of sales figures by product in its most recent earnings update, said London Capital Group head of research Jasper Lawler. “News of slashed production orders has just confirmed those fears, forcing investors to reassess Apple’s outlook.”

There were no major news developments or data releases to prompt the broad sell-off, said Vestact analysts, noting that it appeared to be sentiment driven. “This is quite common after a correction of the sort that we experienced in October. November started well, but the mood is still very fragile.”

Trading this week was expected to be subdued by the US Thanksgiving Day holiday on Thursday, although issues of Brexit and the US-China trade war continue to hover over the market.

Local events are expected to give the market direction in the form of consumer inflation data on Wednesday, and the Reserve Bank monetary-policy decision on Thursday.

There is some optimism that the Reserve Bank will opt to keep rates on hold, due to the prospect of inflation remaining within the Bank’s target range, and weak local economic growth.

The market is almost evenly split on whether the Bank will hike on Thursday, with 11 analyst surveyed by Bloomberg predicting a rise, while 10 expect no change.

The International Monetary Fund (IMF), however, warned on Monday that SA’s economic growth difficulties were structural in nature, saying the Bank should raise rates in the interest of price stability.

Local retailers and banks on Wednesday fell despite a stable rand and plunging oil price. Brent crude dropped more than 3% to below $65 a barrel, offering the prospect of further relief for motorists next month.

With global oil inventories back on the rise and supply outstripping demand, the underlying fundamentals point to further downside for oil prices, said FXTM research analyst Lukman Otunuga.