MARKET WRAP: JSE lower as economic growth disappoints, with banks slipping 3%

The JSE suffered broad-based losses on Tuesday, with most stocks hard pressed after significantly weaker than-expected economic growth numbers soured the mood.

The rand and local bonds weakened after Statistics SA data indicated the domestic economy contracted 2.2% in the first three months of this year, while economic forecasts had expected a drop of just 0.5%.

Mining, manufacturing and agriculture all disappointed, with the agricultural sector falling by almost a quarter. Banks on the JSE fell 3.4% as a result and general retailers 2.28%, although diversified miners were higher.

The JSE small-cap index, the constituents of which are largely focused on the domestic economy, fell 1.75%.

Although disappointing, SA’s economy is not unfamiliar with poor first quarter GDP numbers and has bounced back in the past, according to FNB senior economic analyst Jason Muscat. It was also possible the number could be revised upwards in future releases.

May 2018 saw the biggest outflow of foreign capital ever recorded, with R50bn net outflows, of which R30bn was out of the bond market and the remaining R20bn from equities, analysts at Nedbank Corporate and Investment Banking said.

Independent analyst Ian Cruickshanks said the numbers confirmed the low confidence in the South African economy, with its low growth rates, and would likely lead to rate hikes this year or in 2019.

The mood on global markets was mixed, with the Dow opening firmer before coming under pressure shortly after the JSE closed, while the tech-heavy Nasdaq was at a record high.

The all share ended the day 0.16% lower at 57,779.10 points with the top 40 rising 0.02%. Banks dropped 3.4%, general retailers 2.28%, financials 1.85%, food and drug retailers 1.24%, and property 0.83%. Resources rose 1.92% and the gold index 1.85%.

Anglo American lifted 2.71% to R317.94.

Richemont added 1.93% to R119.10 and Naspers 0.86% to R3,297.

Standard Bank fell 3.91% to R208.15 and Nedbank 3.39% to R274.94.

Among property stocks, Delta shed 2.08% to R6.11 after saying it intended cutting its dividend in the financial year.

MTN was down 2.22% to R116.24.

Steinhoff African Retail fell 4.37% to R16.62 after it emerged that the founders of Tekkie Town would be suing the retailer.

At 5.40pm, the Dow was off 0.16% to 24,773.4 points, while in Europe the DAX 30 had gained 0.49% and the CAC 40 0.12%, while the FTSE 100 had fallen 0.61%.

At the same time gold had added 0.36% to $1,296.62 an ounce while platinum had fallen 0.44% to $896.21. Brent crude was 1.15% lower at $74.49 a barrel.

The top 40 Alsi futures index gained 0.63% to 51,455 points. The number of contracts traded was 23,475 from Monday’s 29,197.