MARKET WRAP: JSE losses mount on global growth jitters
The JSE reversed course to close sharply lower on Tuesday — its third straight day of losses, as global concerns about higher interest rates and possible recession continue to dominate sentiment globally.
The all share index slumped 1.89% to close at 67,900.48 points — marking its lowest level in just over a month — dragged down by the main gauge of top resource shares, which tumbled 3.56% on weaker metal prices.
Banks and insurance stocks were also sharply weaker, as were listed properties and big industrial firms.
However, there were patches of strength in some of the domestically orientated stocks such a Sun International, Cashbuild and Italtile.
Markets appeared to be stabilising earlier in the day after two consecutive sessions of selling that followed a commitment by the US Federal Reserve chair Jerome Powell, in comments delivered at the Jackson Hole Symposium on Friday, to continue hiking interest rates as the central bank seeks to bring record inflation under control.
Investors, however, remain concerned that aggressive increases in rates could choke demand and slam the brakes on global growth.
“With a 75 basis point rate hike now viewed as the more likely outcome from the Fed in a few weeks and European Central Bank officials putting a similar move on the table ahead of its meeting next week, how strong of a recovery can we really expect in equity markets?,” said Craig Erlam, senior market analyst at Oanda.
“Central banks have made it perfectly clear now that the fight against inflation is their primary concern, and a hard landing may just be the price to pay. While that may change if we see any significant improvement on the inflation front over the coming months, the risks still appear more tilted to the downside for the economy,” he added.
In the currency market, the rand weakened towards the R17/$ handle, reflecting global risk-off mood. At 6.40pm the local unit was 0.81% softer at R16.9724/$.
Brent crude slumped more than 6% to trade at $98.23 a barrel, the biggest decline since July 12. Palladium shed 2.5% to $2,094.62/oz.
Among the biggest movers on the JSE, Old Mutual slipped 8.2% to R10.57 despite recording an 87% in improvement in its earnings from existing operations in the six months to end-June. However, its new business volumes dropped 4% to R708m.
Harmony Gold tumbled 11% to R45.62 after reporting that annual profit fell by almost half as a result of lower production and higher costs and impairments.
Source: businesslive.co.za