MARKET WRAP: JSE closes at two-month low on US-China tariff threat

The JSE had its worst week in 10 on Friday, closing at a more than two-month low as US President Donald Trump’s latest tariff threat weighed on global stocks. 

Trump said on Thursday that he would impose a 10% tariff on $300bn worth of Chinese goods from September 1, further dampening hopes that the two economic superpowers will soon reach a deal amid concern about the effect of the trade war on global economic growth. Trump’s threat comes after US and Chinese officials met in Shanghai this week to resume negotiations, to no effect.

Shortly after the JSE closed, the Dow had fallen 0.84% to 26,360.16 points. In Europe, the FTSE 100 was down 2.45%, France’s CAC 40 3.49% and Germany’s DAX 30 3.05%.

Earlier, the Shanghai Composite fell 1.41%, Hong Kong’s Hang Seng 2.35% and Japan’s Nikkei 225 2.11%.

On Wednesday, the US Federal Reserve downplayed market expectations of a monetary policy easing cycle after cutting the interest rate by 25 basis points. The hawkish tone from the Fed pushed the rand to its worst level in five weeks.

US non-farm payrolls, released on Friday, increased by 164,000 in July, while June’s figures were revised downwards. The data is a crucial indicator of the health of the US economy, amid worries of an economic slowdown. 

Soon after the JSE closed, the rand had weakened 0.35% to $14.7141/$, 0.5% to R16.3334/€, abd 0.32% to R17.8398/£. The euro had firmed 0.14% to $1.11.

Gold was flat at $1,445.30/oz and platinum was down 0.36% to $849.44. Brent crude had climbed 1.34% to $62.42 a barrel.

The JSE all share fell 1.66% to 56,273.90 points and the top 40 1.95%. Gold miners gained 5.89%, while industrials fell 1.91%. 

Glencore slumped 3.69% to R43.10 and Sasol 3.97% to R304.21. 

Brait climbed 15.98% to R13.21.

RCL Foods surged 9.66% to R11.47, having reached its best level in more than 10 months during intra-day trade.

Blue Label Telecoms jumped 8.86% to R4.30. 

Discovery fell 0.93% to R132.51. The financial services company announced the appointment of former SA Reserve Bank deputy governor as the deputy CEO of Discovery Bank on Friday.

Gold Fields gained 5.31% to R79.11 after the mining company said on Friday that attributable gold equivalent production for the six months ended June increased by 9% year-on-year to 1,083,000 ounces.

EOH rose 2.32% to R16.74 after the technology company announced the appointment of its chief risk officer, Fatima Newman, as an executive director as of August 1. 

Truworths gained 2.11% to R63.82, despite the retailer saying on Friday that it had impaired the value of its UK business by £97m.

Mining and manufacturing production for June will be published in the coming week. A contraction of 2.2% for mining production from a fall of 1.5% in May and an expansion of 1.7% year-on-year for manufacturing from 1% in the previous month is the consensus, according to a Bloomberg poll.

Investec economist Kamilla Kaplan said the performance of the mining and manufacturing sectors has been constrained by weak domestic demand and a decline in world volume trade. “Additionally, meaningful and sustained expansion of the sectors is perceived to be restricted by infrastructure constraints as well as the prevailing regulatory and government policy environment, which has contributed to suppressing confidence.” 

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Source: businesslive.co.za