MARKET WRAP: JSE weakens in line with global peers

The JSE finished weaker on Monday, but was off the day’s lows, as investors grappled with the US Federal Reserve’s messages on inflation and interest rates.

The all share closed down 1.38% at 69,207 points, the lowest level in a week.  Earlier in the session, the index sank nearly 2%. The top 40 index was off 1.5%.

The current wave of global market selling started on Friday when Federal Reserve chair Jerome Powell said the US economy would need tight monetary policy “for some time” before inflation is under control.

“Powell sent a short and direct message that there won’t be a Fed pivot any time soon and that has markets positioned for further equity weakness,” said Edward Moya, market analyst at Oanda.

“Investors were expecting that once the US got some ugly data … that the Fed would come to the rescue, but that might not be the case,” he said.

“The overarching factor pushing local and global equities lower today is last Friday’s communication from Powell at the Jackson Hole symposium that the committee would continue to use all available tools to fight inflation,” said Lester Davids, analyst at  UnumCapital.

Resource shares were the biggest drag on the overall local market, but Sasol bucked the trend with a gain of 4.66% to R364.24 thanks a higher international commodity prices.

Big industrial shares were also lower on the day, along with banks and insurance stocks.

However, retailers stood out as the bright spot after Walmart offered to buy all the shares in loss-making Massmart it does not already own. Massmart surged nearly 45% to close at R58.68.

Walmart will pay R62 a share, which is a 53% premium to the closing price on Friday and a 68.7% premium to the 30-day volume weighted average price up until the day before the announcement.

Commodity prices showed signs of stability in late trade, with Brent crude gaining 4.35% to $104.10 per barrel — the highest level since the start of August. 

In the currency market, the rand was 0.22% firmer at $16.83/$ after a fairly wild ride in August so far. It strengthened to $16.23/$ earlier in the month before weakening to R17/$, and then recovered to current levels.

At 6.50pm, the Dow Jones Industrial Average was off 0.41%, while in Europe the Dax was 0.61% lower and the CAC 40 was 0.83% in the red. UK markets were closed for a holiday.

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