JSE tracks weaker global markets after Trump threatens tariffs on Mexico

The JSE was weaker, along with global equity markets, on Friday morning, on track for its worst month in seven, as US threats to impose tariffs on Mexico prompted investors to shy away from risk assets.

Local banks were faring worst and the rand was back above R14.80/$, after US President Donald Trump threatened tariffs on Mexico should it fail to stem the flow of illegal immigrants.

There was more bad news on Friday, with China also confirming it was ready to restrict exports of rare-earth minerals amid its trade dispute with the US, said London Capital Group head of research Jasper Lawler. China’s official factory activity readings for May, manufacturing purchasing managers index, fell deeper contraction than markets had expected, bringing into sharp focus the effects of the trade war.

At 10am the all share was down 0.65% at 55,340.3 points and the top 40 had lost 0.67%. Banks lost 1.85% and financials 1.44%. Gold miners were up 3.85%.

May has been a bad month for the JSE, which has lost about 5.5%, amid a global equity sell-off that was prompted by concerns of an escalating US-China trade war and a slowing global economy.

Focus on Friday is on US inflation data due at 2.30pm SA time, while the next major domestic issue that could move markets is an announcement on Eskom. Many analysts believe that details regarding Eskom’s debt burden could be made soon, following the appointment of the new cabinet.

Gold was up 0.53% to $1,295.11/oz while platinum was down 0.34% to $793.60.

Brent crude slumped 2.86% to $64.56 a barrel — a two-month low.

Sasol dropped 3.02% to R366.57.

Both AB InBev and British American Tobacco were down 1.07% to R1,198.5 and R517.58 respectively, while Richemont added 1.61% to R108.13.

Mr Price jumped 6.95% to R189.97. The retailer said on Friday that it was exiting the Australian market. It also reported that total revenue grew 5.8% to R22.6bn in the year to end-March. Retail sales increased 4.4% from the previous comparative period, and other income was up 24.7% to R1.5bn, mainly due to income from financial services.

Omnia fell 4.16% to R44.66, extending Thursday’s 12.16% slump. It had said then that it intended to raise R2bn via share issuance in order to deal with its debt burden. Its market capitalisation is about R3.2bn.

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