MARKET WRAP: JSE feels the pinch as US treasury yields spike
The JSE closed lower on Thursday, but off its worst levels, as global bond yields pushed higher on a booming US economy.
A combination of better-than-expected US jobs numbers on Wednesday and an upbeat assessment of the economy by US Federal Reserve chair Jerome Powell have pushed global bond yields higher.
The rand weakened as a result, with large diversified miners benefiting, further bolstered by a continued climb in the price of Brent crude, which hovered around $86 a barrel.
The all share fell 0.26% to 55,030.6 points, and the top 40 0.11%. Industrials fell 1.1%, food and drug retailers 2.63% and retailers 0.51%. Resources gained 1.68% and gold miners 1.03%.
US private-sector employers added 230,000 jobs in September, well ahead of market expectations of a 185,000 increase. The data comes ahead of US non-farm payrolls data on Friday.
The JP Morgan Global Bond yield was rising towards 2.7%, which is the “Rubicon level” for global financial markets, said Nedbank Corporate and Investment Banking analyst Mehul Daya and Neels Heyneke. “Prospects for global growth and risk assets are likely to be dented over the next six to 12 months, as the rising cost of capital globally will likely weigh on the global economy’s ability to generate liquidity.”
The Dow opened lower, looking set to snap a five-day winning streak, as investors kept an eye on rising bond yields, reported Dow Jones Newswires.
Diversified miner BHP rose 3.51% to R326.73, Glencore 3.42% to R64.32 and Anglo American 2.24% to R334.30.
Rand hedge AB InBev gained 0.86% to R1,279.37, while British American Tobacco, trading ex-dividend, fell 0.34% to R657.86.
Clicks dropped 4.32% to R165.03, Pick n Pay 3.84% to R66.54 and Spar 2.79% to R174.28.
Tiger Brands slipped 3.36% to R249.11.
MTN fell 2.51% to R87.30.
Naspers slipped 1.55% to R2,924.
Pioneer Food Group slumped 10.65% to R81.13, despite saying earlier it expected headline earnings per share (HEPS) to be at least 24% higher in the year to end-September, with its recent acquisitions helping boost revenue and volume growth.
Argent Industrial fell 2.2% to R4, after saying earlier it expected HEPS to grow by between 36.9% and 56.9% in the six months to end-September, when compared to the prior comparative period.
Shortly after the JSE closed, the Dow was off 0.76% to 26,625.16 points, while in Europe, the FTSE 100 had fallen 1.22%, the CAC 40 1.46% and the DAX 30 0.22%.
At the same time, platinum was up 0.6% to $828.50 an ounce and gold 0.56% to $1,203.88. Brent crude was 0.28% lower at $85.69 a barrel.
Source: businesslive.co.za
