MARKET WRAP: JSE closes lower as traders await US Fed interest-rate stance

The JSE closed lower on Tuesday, tracking global markets as traders await any further signs regarding the trajectory of US monetary policy, placing pressure on global risk assets. 

Investors have dialed back expectations that the US may cut interest rates after better-than-expected non-farm payrolls data was released on Friday. US Federal Reserve chair Jerome Powell will testify before Congress on Wednesday and Thursday, as expectations of a 50-basis-point cut at its next meeting wear off.

“A moderate easing in interest rates could help in counterbalancing the negative impacts of the US–China trade war. Hence, at Powell’s testimony, US policy makers will be after any information on whether the Fed will lower interest rates in the coming meetings and by how much,” London Capital Group senior market analyst Ipek Ozkardeskaya said in a note. 

Traders will be monitoring developments in the US-China trade dispute as the two economic superpowers are set to resume negotiations this week.

The JSE all share fell 1.33% to 56,963.80 points and the top 40 1.43%, with the former reaching its lowest level in a month during the course of the day. Banks lost 2.04% and the platinum index 1.8%.

Standard Bank relinquished 1.95% to R186.75, FirstRand 2.15% to R64.70, Absa 2.02% to R166.14, and Nedbank 1.86% to R241.06.

Brait dropped 4.75% to R18.25, despite the investment holding company saying on Monday that its UK retailer, New Look, was in a better position for a turnaround in its performance. 

Among platinum miners, Impala lost 2.47% to R73, Anglo American Platinum 1.81% to R795.31, and Northam 0.79% to R63.

Naspers fell 1.53% to R3,400. 

Sappi slumped 6.14% to R51.20, after having reached its lowest level in almost four years in intra-day trade.

Kibo Energy plunged 7.41% to 25c, to its lowest level in almost three months. 

Tradehold plummeted 9.96% to R11.39. 

Minerals company Tharisa fell 2.62% to R20.45. This despite it reporting an improvement of 2% and 5.4% in reef tonnes mined and milled, respectively, for the quarter ended June 30.

Shortly after the JSE closed, the Dow was 0.30% lower at 26,725,22  points, its third consecutive negative day. In Europe, the FTSE 100 had fallen 0.14% and France’s CAC 40 0.32%.

Germany’s DAX 30 was 0.87% lower after the world’s biggest chemical producer BASF cut its profit forecast for the year by 30% on Tuesday, citing effects of the US-China trade war and a slowdown in markets, Bloomberg reported. 

Earlier, in Asia, the Shanghai Composite fell 0.18% and Hong Kong’s Hang Seng 0.76%, while Japan’s Nikkei 225 gained 0.14%. 

At 5.30pm, the rand had strengthened 0.3% to R14.1432/$ and 0.35% to R15.8536/€. It was 0.66% stronger at R17.6331/£, amid growing Brexit jitters. The euro was flat at $1,1209. 

Gold was up 0.1% to $1,396.86/oz while platinum had fallen 0.78% to $808.52. Brent crude added 0.41% to $64.16 a barrel, having now risen almost 19% this year, driven by oil cartel Opec’s supply cuts, and tension between the US and Iran. 

The US Fed will release minutes from its June meeting  on Wednesday while the UK is scheduled to deliver manufacturing and industrial production figures for May.

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