MARKET WRAP: JSE closes weaker as foreign selling continues

The JSE closed weaker for the second consecutive session on Tuesday as uncertainty about global trade, against the backdrop of a hawkish stance from the US Federal Reserve, continued to rattle markets.

Analysts described the steady decline in emerging-market stocks over the past few months as a full-blown plunge as China extended its losses, from its 2018 high, to 20%.

The Dow opened flat after closing lower on Monday, weakening below the important 200-day moving average for the first time since June 2016.

Foreigners have been dumping emerging-market investments with the net outflows from local bond and equity markets amounting to R30.6bn this year. While this has been predominantly driven by a sharp sell-off in bonds, stocks have not come out unscathed, with inflows dropping from a peak of R35bn in early May, to the current R6.6bn. Last week’s total outflows amounted to R14.1bn.

Naspers and rand hedges Anheuser-Busch InBev and British American Tobacco, together with Capitec, led the losers on the day, on a volume basis.

The all share closed 1.14% lower at 55,254.7 points. The top 40 also lost 1.14%. The gold index shed 3.46%, property 1.77%, industrials 1.74%, platinums 1.33%, financials 0.79%, and banks 0.77%. Resources rose a marginal 0.04%.

Standard Bank dropped 1.64% to R184.85 but FirstRand gained 0.56% to R60.89.

Sibanye-Stillwater plummeted 11.19% to R8.33 after reporting the death of another worker at one of its mines.

Quilter rose 0.78% to R27.01 on its second day of trade, while Old Mutual Ltd, in its first trading day, closed at R29.40 after moving in a narrow range between R27.10 and R29.40 on the day.

Naspers lost 3.38% to R3,098.50.

The rand was range-bound for most of the day with a weaker bias. It was flat at R13.5461 to the dollar soon after the JSE’s close.

Local bonds were steady with the R186 last bid at 8.88% from 8.90% amid a lack of guidance from global bond markets. The US 10-year treasury yield was flat at 2.8815%.

Risk aversion remained the foremost issue for the market, and the dollar looked set to continue to be one of the biggest beneficiaries of the safe-haven shift by investors, Oanda analyst Craig Erlam said.

The top 40 Alsi futures index lost 1.03% to 49,408 points. The number of contracts traded was 17,949 from Monday’s 19,327.