MARKET WRAP: JSE closes weaker as Naspers leads the way down in risk-off trade

The JSE closed weaker on Wednesday as Naspers led the losses, in terms of volume, amid continued global risk-off trade, despite some promising signs that the Italian political crisis may be defused soon.

Italian populist parties, which obtained 50% of the vote in the recent elections but have yet to form a government, indicated that they were again starting talks to that end. This could prevent another Italian election being held, with the euro under pressure earlier on the possibility that the populist parties might increase their share of the vote.

The euro also clawed back some lost ground against the dollar on Wednesday after the European Central Bank (ECB) said it would continue with plans to phase out its bond-buying programme later in 2018, despite the Italian situation.

Weaker Chinese markets affected Naspers’s performance, following an announcement by US President Donald Trump’s administration that the US was moving forward with its threat to apply tariffs on Chinese imports.

Asian markets usually set the trend for the daily trade in Naspers, as the local heavyweight owns 31.2% of Chinese internet company Tencent.

The Dow was 0.8% higher at the JSE’s close, despite US GDP being revised lower, to a 2.2% annual growth rate in the first quarter of 2018, from an initially reported 2.3%, on weaker inventories.

The US added 178,000 private-sector jobs in May, payrolls processor ADP said on Wednesday, from a predicted 190,000.

The all share closed 0.6% lower at 55,601.60 points and the top 40 lost 0.68%. General retailers fell 1.13%, industrials 1%, gold miners 0.9%, financials 0.51% and banks 0.25%. The platinum index added 1.01% and food and drug retailers 0.78%.

Naspers lost 2.19% to R3,020.44.

Kumba Iron Ore was down 2.34% to R283, while Lonmin jumped 5.12% to R7.19 and Sibanye-Stillwater 2.6% to R7.90.

At 6.30pm the rand was at R12.5257 to the dollar, from R12.6935, as the euro gained to $1.1637, from $1.1539.

The euro recovery came after it was hammered by a stronger dollar over the past week amid concern that a populist government in Italy might consider exiting the currency union.

Local bonds were flat with the R186 last bid at 8.52%, while the US 10-year treasury was at 2.8323% from 2.7756%.

The top 40 Alsi futures index lost 0.37% to 49,650 points. The number of contracts traded was 25,058 from Tuesday’s 21,143.