JSE weaker as Trump comments and stalled trade talks unsettle markets

The JSE closed weaker on Friday on global risk-off sentiment, as investors stood on the sidelines following remarks by President Donald Trump that the US could decimate North Korea in a similar fashion to what happened in Libya with President Gaddafi’s removal in 2011.

Although Trump later backtracked from the comments, also echoed by his security advisor John Bolton, it drew a sharp response from Korean leader Kim Jong-un ahead of their scheduled meeting on June 12 in Singapore.

Although the Dow was flat at the JSE’s close, analysts warned of the dangers ahead. Indications were that trade talks between China and the US appeared not to be progressing well, as yields on the US 10-year treasury remain elevated above 3%.

“We should highlight that with yields still above 3% and concerns for a potential breakdown of US-China negotiations the risk for equities was to the downside,” said Konstantinos Anthis, head of research at ADS Securities, in a note to clients.

Trump’s threats coincided with renewed negative sentiment toward emerging markets. The rand weakened to a five-month low of R12.818 to the dollar on Friday afternoon, putting it on track for its worst weekly performance against the dollar since October.

Indonesia joined Turkey and Argentina in hiking interest rates, but the efforts have had little effect on their currencies, which declined markedly this week.

A weaker rand failed to support rand hedges, already under pressure from disappointing results from Richemont and little change in the Naspers share price. Miners lifted marginally as Brent crude slipped below $80 to $79.41 a barrel by the close.

Banks and retailers were the main losers on the day.

The all share closed 0.65% lower at 57,804.30 points and the top 40 dropped 0.74%. Banks lost 1.95%, the platinum index 1.89%, general retailers 1.8% and industrials 1.07%. Resources gained 0.68%.

The all share ended the week 1.06% lower.

Sasol rose 1.09% to R484 on Friday, extending gains for the month to 13%.

Richemont dropped 3.7% to R118.98.

Standard Bank lost 2.48% to R197.99.

Liberty was down 1.07% to R123.44. The group said in a statement on Friday that its retail division had secured R1.5bn worth of new business during the March quarter, which was 3% lower than the comparable period in 2017.

Steinhoff International rocketed 12.5% to R1.80 on optimism emanating from a meeting with lenders to restructure more than €10.4bn of debt.

Steinhoff Africa Retail (Star) added 1.97% to R17.59.

Liberty Two Degrees jumped 5.56% to R7.60 after announcing it intended converting its structure to that of real estate investment trust (Reit).

Murray & Roberts rose 4.03% to R16.01 after announcing it was making a takeover offer for Aveng. Aveng lost 1.1% to 90c.

Naspers shed 0.07% to R3,201.65.

The top 40 Alsi futures index fell 0.79% to 51,700 points. It ended the week 1.05% lower. The number of contracts traded was 18,978 from Thursday’s 14,950.