MARKET WRAP: JSE at six-week low as election results roll in

The JSE fell on Thursday, in its worst day in four months, amid risk-off global trade.

Concerns about escalating trade conflict between the US and China kept investors nervous, even as negotiations between them continued on Thursday in Washington.

Investors had clearly overestimated how easy the US-China trade talks would be, and had been expecting a soft landing to the conflict, said Independent technical analyst Frans de Klerk. “The market was so overbought it had to correct. Unfortunately, we may now see the ugly bear market that everyone has been anticipating.”

Locally, all eyes are on the elections as investors wait to see the size of the ANC’s majority. The party’s performance will be closely watched amid uncertainty regarding the ability of President Cyril Ramaphosa to push ahead with his pro-growth and anticorruption agenda.

The election result in Gauteng is also grabbing attention, due to the possibility that a coalition government will need to be formed in SA’s economic heartland.

Although international news was the dominant theme on the market on Thursday, movements in the rand showed that investors may be a little sceptical that the outcome would ultimately be market friendly, said De Klerk. A key level to watch would be the rand’s 40-week moving average of R14.247/$.

As the JSE closed the ANC held 56.88% of the vote, with about 42% of ballots counted. The rand was 0.4% weaker at R14.4275/$.

The all share gave up 2.67% to 56,496.1 points and the top 40 2.79%. Platinums slumped 5.18%, food and drug retailers 2.81% and industrials 2.71%.

Shortly after the JSE closed the Dow had slumped 1.47% to 25,585.54 points, while in Europe, the FTSE 100 had lost 0.88%, the CAC 40 1.96% and the DAX 30 1.82%.

Gold was up 0.32% to $1,284.80/oz while platinum was down 1.36% to $850.37. Brent crude had fallen 0.74% to $69.68 a barrel.

There was also a spate of corporate news and economic data for local investors, with the latter coming in better than expected. Mining production decreased 1.1% year on year in March, after plummeting to a revised 8.1% in February, its lowest level in three years, data from Statistics SA showed. This is the fifth consecutive contraction in the sector but a much better outcome than the 7% contraction economists polled by Bloomberg had expected.

Manufacturing also surprised, growing by an annualised 1.2% in March, while the consensus expectation had been for 0.15% growth.

Steinhoff International plummeted 20.4% to R1.60. The embattled group reported on Tuesday night that it suffered a net loss of €4.03bn in the 12 months to end-September 2017.

Diversified miner Glencore fell 3.46% to R52.50, Anglo American 2.96% to R355.48 and BHP 2.44% to R324.25.

Sasol slipped 2.97% to R435.41.

Rand hedge AB InBev gave up 2.08% to R1,201 and Naspers 3.76% to R3,410.

MTN fell 2.93% to R100.42, having earlier reported a mixed performance across its African operations in the first quarter to end-March.

Vodacom slumped 4.19% to R112.35.

Sibanye-Stillwater dropped 5.7% to R12.40. It said earlier that production costs per unit of gold spiked in the quarter to end-March, as a result of a five-month strike by the Association of Mineworkers and Construction Union (Amcu).

Lonmin plunged 7.79% to R12.08.

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