MARKET WRAP: JSE drops amid renewed trade-war fears

The JSE closed in negative territory on Tuesday, while global markets remained mixed amid concern that trade tension could continue into 2020.

US President Donald Trump said on Tuesday that a trade deal with China could happen after the US election in 2020, adding to investor fears about the effect the spat will have on the global economy.

France and the EU say they are ready to retaliate if Trump imposes a 100% tariff on $2.4bn (R35.25bn) worth of French imports, Reuters reported. The US said on Monday that it may slap France with tariffs on cheese, handbags and champagne, saying that the latter’s digital services tax could hurt US tech companies.

“Trump has also been eager to take aim at Europe but has maybe been deterred from doing so as the risks of fighting a trade war on two fronts going into an election are too severe,” Oanda senior market analyst Craig Erlam said.

Trump also said on Monday that the US would restore tariffs on steel and aluminium imports from Argentina and Brazil.

Shortly after the JSE closed, the Dow was down 1.35% to 27,402.44 points. In Europe, the FTSE 100 lost 1.69% and France’s CAC 40 1.24% while Germany’s DAX was flat.

Earlier, the Shanghai Composite rose 0.31% while Hong Kong’s Hang Seng fell 0.2% and Japan Nikkei 225 0.64%. 

Despite reaching a five week-high of R14.51/$ earlier on Tuesday, the rand pared gains weakening to R14.69/$ in intraday trade after GDP contracted -0.6% in the third quarter from growth of 3.2% in the previous quarter. The median forecast according to Bloomberg was for GDP growth to have been 0%. 

“Mixed fourth-quarter economic trends now pose a risk that average growth in 2019 may therefore turn out to be even lower than 0.5%. Growth forecasts for 2020 will, in any case, need to be revised downward, possibly closer to 1%,” North West University Business School economist Raymond Parsons said.

At 5.18pm, the rand had weakened 0.56% to R14.6271/$, 0.58% to R16.2068/€ and 0.95% to R19.0034/£. The euro was flat at $1.1079.

Gold was up 1.07% to $1,478.096/oz and platinum 1.2% to $909.41. Brent crude lost 0.54% to $60.58 a barrel.

The JSE all share fell 0.6% to 54,485.40 points and the top 40 0.64%. Resources fell 0.94% and industrials 0.93%. 

Curro Holdings said on Tuesday that it had acquired three new schools in Gauteng as parts of its plan to increase its presence in the province. Its share price was down 0.8% to R16.41.

Grindrod Shipping fell 1.97% to R95.09 after it said on Tuesday that it had extended the termination date of its IVS Bulk joint venture to December 31.

Grand Parade Investments gained 4% to R3.80. It said on Tuesday that its chair, Hassen Adams, will retire at the end of January 2020.

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