MARKET WRAP: JSE has worst week in 14 months amid US-China trade jitters

The trade war between China and the US has overshadowed local election news over the past few days, pushing the JSE into its worst week in more than a year.

By the close of trade on Friday the JSE was down 4.31% to 56,780.8 points for the week, falling every day to Thursday, ahead of Trump’s eventual decision to increase tariffs on Chinese imports worth about $200bn up to 25%. The conflict between the two economic superpowers is bad for the rand as it has the potential to slow the global economy, hurting exports.

Stock markets in the US and Europe were headed for their biggest weekly drops of 2019, even though they were higher on Friday, while the JSE all share climbed 0.5% on the day. 

This week’s stock market performance was in sharp contrast to that of the rand and bonds, which reached three-week highs as it became clear that the ANC would secure a commanding victory in the national elections, as expected. The outcome was favoured by markets as traders believe it will give President Cyril Ramaphosa a strong mandate to continue with his economic reforms. 

The top 40 climbed 0.54%. 

The banking index fared best, rising  3.35%, with Standard Bank gaining 4.08% to R203.66, Absa 3.43% to R167.15, FirstRand 3.72% to R69.50, and Nedbank 3.13% to R273.80.

Lonmin, the world’s third-largest platinum miner, said earlier that total platinum production as measured by metal in concentrate fell by 10% to 276,020oz in the six months to end-March. Its share price was down 1.99% to R11.84.

Pepkor lost 0.16% to R19.24, despite saying on Friday that its half-year earnings climbed by 54.1% during the six months to end-March.

Steinhoff International slumped another 11.25% to R1.42. This brought its losses for the week to more than 28%, following the release of its restated financial 2017 results on Tuesday.

Naspers added 0.44% to R3,425.10.

Financials were up 2.11%, with Sanlam rising 2.63% to R76.82, Old Mutual 2.65% to R23.26, and Discovery 3.12% to R149.67.

The general retailers index gained 1.76% with Mr Price up 1.84% to R214.47, Woolworth 2.63% to R48.03, TFG 2.36% to R191.62, and Massmart 1.77% to R87.57.

The rand was 1.12% firmer at R14.1845/$. It rose 0.86% to R15.9462/€ and 0.89% to R18.4914/£. The euro firmed 0.26% to the dollar to $1.1241. 

The performance of the rand in the forthcoming week will be largely dependent on the US’s additional tariff threat, as well as political events on the domestic front, including the final election results and potential coalitions, said Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions. 

Gold was up 0.36% to $1,288.49/oz and platinum 2.06% to $865.17. Brent crude added 0.9% to $70.84 a barrel.

At the JSE’s close, the FTSE 100 was flat, while the CAC 40 had gained 0.27% and the DAX 30 0.72%.

In the week ahead, unemployment figures for the first quarter will be released on Tuesday, while retail sales for March are due on Wednesday. Some analysts are expecting retail sales to slow in line with the decline of retailer confidence in the first quarter of 2019. According to a Bloomberg consensus, growth in retail sales will likely fall to 0.6% year-on-year compared to 1.1% in February.

Vodacom, Investec and Richemont are all expected to release full-year results next week.

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