MARKET WRAP: JSE starts week on negative note as industrials and banks retreat

The JSE closed weaker on Monday in global risk-off trade as the Dow opened weaker and European markets closed in the red on global trade-war concerns.

The European auto sector has been hard hit after President Donald Trump reiterated his threat to impose tariffs on European vehicles, despite opposition from US lawmakers and domestic and foreign auto makers.

Trade is expected to be prominent on the agenda when European Commission president Jean-Claude Juncker visits the White House on Wednesday.

Markets have seesawed in recent months as investors reacted to heightened rhetoric on trade, and the imposition of US tariffs and retaliatory measures from China and Europe, Dow Jones Newswires reported.

The trade-related sell-offs were driven more by sentiment than fundamentals, said Patrick Spencer, Baird’s vice-chairman of equities. Even though tariffs made up a fraction of world GDP, the concern was that “companies will just stop spending because they don’t know what’s going to happen.”

Over the weekend, finance ministers and central bankers of the G20 group of countries ended their meeting with little progress on resolving global trade tension.

US Treasury secretary Steven Mnuchin said “it’s definitely a realistic possibility” that Trump would follow through with his threat to impose tariffs on $500bn of Chinese goods.

The all share ended the day 0.76% lower at 56,556.80 points and the top 40 lost 0.83%. Industrials shed 1.29%, banks 1.04%, food and drug retailers 0.85% and general retailers 0.55%. The gold index lifted 0.52%.

Sasol rose 0.43% to R505.

Global luxury goods firm Richemont lost 1.14% to R117.48.

Steinhoff International plummeted 14.24% to R2.77. On Friday, the company’s creditors agreed to hold off on pursuing their debt claims for three years.

Naspers closed 1.68% lower at R3,390.61 amid renewed criticism levelled against the group after it was disclosed that CEO Bob van Dijk had received a share bonanza of R1.6bn.

Nepi Rockcastle rose 1.47% to R118.02.

The rand was about 0.8% weaker at R13.53 against the dollar as the latter clawed back some lost ground against the euro.

Eskom’s annual results also provided some headwinds for the local currency, with the company’s total debt burden of R360bn presenting a risk to the rest of the economy.

Bonds tracked the weaker rand with the R186 last bid at 8.765% from 8.715%.

The top 40 Alsi futures index dropped 1.09% to 50,430 points. The number of contracts traded was 16,408 from Friday’s 20,289.