MARKET WRAP: JSE weakens as market eyes future of ‘Trumponomics’

The JSE weakened on Tuesday, led lower banks and rand hedges, but came off its worst levels towards the close as Naspers pared losses.

The tone on global markets was cautious, with investor focus on the outcome of the US mid-term elections, which offers the prospect of political gridlock in Washington.

Global markets edged lower for much of the day, although the Dow opened higher, giving some relief to most local indices.

Should the Democrats win back a majority in the house of representatives, US President Donald Trump will find it more difficult to push his agenda, analysts said. This could reduce market volatility, to the benefit of emerging-market risk assets.

However, should Republicans prevail, stocks could be boosted by the prospect of “Trumponomics 2.0”, said Oanda vice-president of market analysis Dean Popplewell.

Naspers fell 0.54% to R2,910, tracking losses in Hong Kong-listed associate Tencent. Pressure on the share price of Apple has once again put other tech stocks on the back foot.

Heavy tech-sector selling during October signaled broader market concerns about the longevity of global economic growth and jitters about riskier stocks, reported Dow Jones Newswires.

The all share slipped 0.85% to R54,450.6 points and the top 40 0.85%. Platinum miners lost 2.61%, food and drug retailers 1.31% and industrials 0.99%.

Local news is expected to offer little direction for equities this week, with investor focus also on Thursday’s US Federal Reserve policy announcement. No change in interest rates is expected.

Local corporate news on the day was largely negative.

Group Five initially plummeted more than 20%, before recovering to finish at R1.15, or 0.86% lower. It earlier warned shareholders it had failed to meet the October deadline to complete its disastrous Ghanaian power station project, Kpone, which contributed to a R1.3bn loss in its 2018 financial year.

Pan African Resources rose 0.65% to R1.54, after earlier reporting that it was confident of achieving its production guidance for the 2019 financial year, having ramped up output in the quarter to end-September.

Harmony Gold slipped 3.14% to R25.31, despite saying earlier that gold production in the quarter to end-September rose 30% year-on-year, but dipped 2% quarter-on-quarter.

Ayo Technologies rose 3.96% to R24.95 after saying earlier it expected to report net profit attributable to owners of the parent for the year to end-August to rise to between R142m and R162m, compared to a net profit of R16.7m. The group, however, slashed its earlier forecast of headline earnings per share (HEPS) for the period by 80%.

British American Tobacco (BAT) slumped 4.23% to R611.

Shortly after the JSE closed, the Dow was up 0.3% to 25,538.78 points, while in Europe, the FTSE 100 had lost 0.63%, the CAC 40 0.03%, but the DAX 30 had risen 0.17%.

At the same time, gold was flat at $1,230.69 an ounce, while platinum was up 0.79% to $870.55. Brent crude was 0.2% firmer at $72.78 a barrel.

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