JSE weakens as banks and retailers fall in risk-off trade

The JSE closed weaker on Monday as risk-off sentiment dominated on concern about a trade war between China and the US.

Those fears have capped investors’ appetite for risk, explaining why the US stock market has struggled for momentum, Dow Jones Newswires reported.

“For the first four months of the year, all of these threats were there but no one really thought the clouds were going to materialise. Now we’re back to the wall of worry,” said Jim Tierney, chief investment officer of concentrated US growth at AllianceBernstein.

Technical glitches at the JSE’s opening and closed Chinese markets had a negative effect on volumes, which were exceptionally low at about R11bn. The daily average is about R24bn.

Trade started two hours late due to an unspecified technical problem, the JSE said.

The Dow opened 0.9% lower, while Chinese markets were closed for the dragon boat festival.

After falling sharply on Friday, Brent crude was up 2% to $74.57 a barrel at the bourse’s close.

Oil cartel Opec and nonOpec members will meet in Vienna on Thursday for the start of a three-day summit, where production cuts are on the agenda as the latest US data showed an increase in production.

The rand was 2% weaker at the JSE’s close, at R13.6885 to the dollar from R13.4223, supporting miners toward the close. But rand hedges showed little reaction.

A weaker rand will certainly be welcomed by mining bosses, said Old Mutual Multi-Managers analyst Dave Mohr. “For ordinary investors, it is also not a bad thing as long as inflation remains relatively well behaved.”

Mohr said South African individuals and companies had built up a large foreign-asset base that should benefit from a depreciating currency.

The all share closed 0.73% lower at 57,236.80 points and the top 40 dropped 0.63%. Banks lost 2.87%, general retailers 2.84%, food and drug retailers 2.12%, financials 2%, property 1.71% and the platinum index 1.65%. The gold index added 1.55% and resources 0.34%.

Anglo American rose 1.17% to R310.86 and Sasol 0.41% to R481.31.

British American Tobacco dropped 1.32% to R659.

Standard Bank slumped 3.52% to R190.17.

Invicta Holdings plummeted 8.36% to R36.70 after warning on Friday that annual headline earnings were set to drop 81%, due to a costly tax liability arising from past transactions.

Life insurers were under pressure following Liberty’s reported cyber attack. It shed 4.03% to R119 and Old Mutual 1.37% to R38.78.

PPC dropped 1.91% to R7.20. It said earlier that headline earnings per share increased 114% to 15c for the year to end-March.

Mr Price fell 5.06% to R230.52, Steinhoff Africa Retail 2.43% to R18.05 and Shoprite 3.13% to R225.87.

Growthpoint shed 2.63% to R26.30 and Redefine 2.71% to R10.43.