MARKET WRAP: JSE closes lower on renewed concern over trade war

The JSE fell on Monday to a three-month low, after the Dow opened weaker amid ongoing concern about an escalating global trade war.

Sentiment soured after US President Donald Trump renewed his threats of slapping tariffs on a number of countries, without naming them specifically, in a tweet. However, in a tweet late last week Trump threatened German car manufacturers with higher tariffs.

Trump is also expected to announce curbs on Chinese investment in US technology firms soon, after last week warning that additional tariffs of $200bn could be levied against China, if that country attempted to retaliate with its own tariffs.

Brent crude oil dropped nearly 2% following Saudi Arabia’s commitment at the weekend to support an increased supply plan. This followed an earlier deal by oil cartel Opec, which disappointed the market, sending oil prices initially higher.

The all share ended the day 1.7% lower at 55,889.3 points, its first close below 56,000 since April 6. The top 40 shed 1.81%, resources 2.05%, industrials 1.99%, general retailers 1.77%, food and drug retailers 0.77% and financials 0.72%.

Anglo American lost 3.5% to R292.57 and Kumba Iron Ore 5.33% to R286.

FirstRand lost 1.38% to R60.55.

Quilter closed at R26.80 on its first trading day, ranging between R26.04 and R28.44.

Naspers fell 3.04% to R3,207, hit by a double whammy of mixed results on Friday together with negative Chinese markets. It holds just under a third of Chinese internet and gaming company Tencent, which remains the main driver of its earnings and market value.

The rand was weaker against global major currencies on Monday afternoon after the Turkish lira lost the initial gains made following the re-election of Recep Tayyip Erdogan for another five-year term, as president.

The rand was at R13.6055 to the dollar from R13.4209 at the JSE’s close. It was even worse against the euro, hitting R15.9162 to the bloc’s currency, more than 1.5% weaker on the day.

The rand has been caught up in the crossfire of the ongoing global trade war, predominantly between the US and China, leaving many wondering about its potential effect on the global economy.

The rand found little support from a slightly firmer euro, as the common currency shrugged off weaker data from Germany.

Local bonds edged weaker with the R186 last bid at 8.9% from 8.87%. The US 10-year benefited from renewed safe-haven investment with the yield last seen at 2.8696% from 2.8952%.

The top 40 Alsi futures index lost 2.27% to 49,780 points. The number of contracts traded was 19,327 from Friday’s 19,934.