MARKET WRAP: JSE has worst day in two months as Trump attacks China on trade

The JSE fell on Tuesday, tracking losses on major global markets, as US President Donald Trump fired off a series of tweets criticising China’s trade practices.

The move soured the mood on global markets, which had been lifted recently by the news that US-China trade talks would resume this week.

Local economic news on the day was disappointing. Statistics SA reported earlier that SA’s unemployment rate rose to 29% in the second quarter of 2019, higher than the 27.7% expected in the Bloomberg forecast, and from 27.6% previously.

The rand, however, was fairly firm earlier in the day, but lost some ground against the dollar when Eskom’s financial results were released. As the JSE closed it was 0.16% weaker at R14.1853/$.

Eskom reported a R20.7bn loss, roughly in line with previous guidance, and a record loss for a state-owned enterprise.

The rand’s earlier strength was surprising, as little positive had changed for SA’s outlook, said Monex Europe forex market analyst Simon Harvey. “SA’s economy still needs structural reforms, across the board. Slowing economic growth should not be a surprise.”

The all share fell 1.37% to 51,241.6 points and the top 40 1.48%. This was the biggest one-day drop for the all share since May 23.

Banks gave up 1.55% and financials 1.81%. Gold miners added 1.41%, and food and drug retailers 1.18%. 

Shortly after the JSE closed, the Dow was flat at 27,201.84 points, while in Europe, the FTSE 100 had dropped 0.42%, the CAC 40 1.7%, and the DAX 30 2.19%.

Gold was up 0.16% at $1,428.84/oz while platinum had lost 1.15% to $870.79. Brent crude was 0.25% higher at $64.03 a barrel.

Corporate news on the day was mixed, with Shoprite jumping and Massmart slumping.

Shoprite gained 5.75% to R153.97. The retailer said earlier it expected revenue growth of 3.2% in the year to end-June, higher than the Bloomberg consensus expectation of 2.2%. Excluding the effect of hyperinflation in Angola, turnover was up 3.6%.

Massmart plunged 15.45% to R49.80. It said it expected its net loss for the six weeks to end-June to widen to as much as R602m compared to the prior period’s R195.7m.

Christo Wiese-chaired Invicta added 1.06% to R23.75. It said earlier that Steven Joffe will replace long-serving CEO Arnold Goldstone at the end of 2018.

Hammerson lost 7.88% to R41.29, extending Monday’s 6.25% slump. It said earlier that rental income from flagship UK properties fell 6.8% on a like-for-like basis in the six months to end-June.

Blue Label Telecoms gave up 1.37% to R3.59. It said earlier that it had invested in Cape Town-based sports technology start-up Mobii Systems in a deal that will see Blue Label take up a 26% in the business.

Naspers fell 1.9% to R3,543.80.

Focus on Wednesday will be on the US Federal Reserve, with the world’s most influential central bank expected to cut interest rates by 25 basis points (bps).

A 50bps cut is still not out of the question, but with two positive US economic prints last week, namely durable goods and GDP, the market has settled on a 25bps cut, said Vanguard Markets managing partner Stephen Innes in a note.

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