MARKET WRAP: JSE weaker as investors fret about global growth

The JSE ended lower on Monday in line with world markets as investors grappled with the effects of inflation and interest rates on global growth.

The all share index shed 0.75% to close at 69,195 points, dragged lower by the top end of the industrial market, notably Richemont, which was off 3%. The top 40 was 0.78% lower.

“Stock markets are off to a bad start on Monday as investors question whether the recovery trade has gone too far,” said Craig Erlam, senior market analyst at Oanda.

“Last week brought an end to the late summer winning streak that saw stock markets recover a significant — and some would argue overly so — portion of the losses endured this year.”

Shares in retailer Massmart recovered 6.16% to R43.10 while Motus gained 3.34% to R117.45, buoyed by a trading update. The group, which runs one of SA’s biggest car dealerships, expects full-year headline profit to rise by up to 73%.

Coal stocks continue to whet investors’ appetites given the energy crunch in Europe. Exxaro was up 4.04% to R222.22, while Thungela gained 3.38% to R336.03, stretching the year-to-date gains to 297%.

The listed property sector was under pressure, with Hammerson tumbling 9.23% to R4.72, weighed down by the rising cost of living and recession fears in Europe, where the company has operations.

In the currency market, the rand held relatively steady against the dollar, after hitting the R17/$ mark on Friday, the lowest level in a month.

As recently as August 12, the rand was trading at R16.17/$, which was its best level since late June, before it reversed course due to the strong US dollar. At 6.30pm the rand was flat at R17/$ , but was nearly 1% stronger against the euro at R16.9168/€.

Investec group chief economist Annabel Bishop said in a note that risk assets focus particularly on growth expectations.

“Higher global interest rates, which are intended to slow economic growth, and so demand, materially have a negative effect on the expected returns of risk assets, and so on the assets themselves,”  Bishop said.

Europe’s main equity benchmarks were mostly lower, with the CAC 40 down 1.8% and Germany’s DAX 2.32% in the red. The FTSE 100 was off 0.22%. The Dow Jones Industrial Average was 1.5% lower at 7pm. 

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