MARKET WRAP: Miners and banks fall the most this week

The JSE closed the week lower amid mixed global peers, as concerns about a third wave of Covid-19 infections in SA weighed on sentiment.

Stocks on the local bourse extended their losses on Friday as caution persisted in the markets after Federal Reserve officials on Wednesday signalled monetary policy tightening could start sooner than expected.

Industrial metals and banks led the JSE sell-off for a second consecutive day, closing the week 7.07% and 5.73% weaker, respectively. 

The Fed signalled an unexpected shift in tone on Wednesday, indicating two rate hikes in 2023, while also raising its inflation forecast for 2021 by one percentage point to 3.4%.

Concerns over a possible change in tack by the Fed were validated on Wednesday and while some of the resulting fallout from the federal open market committee (FOMC) statement has abated, elements of doubt remain, leading to mixed outcomes,said RMB head of global markets research Nema Ramkhelawan-Bhana.

Both the JSE all-share and the top 40 fell the most in about two weeks, with the former down 1.43% to 65,635 points, and the latter 1.48% lower. Industrial metals dropped 2.5%, financials 2.24%, banks 2.1%, resources 1.66% and industrials 1.19%.

At 6.10pm, the Dow Jones Industrial Average was 1.13% weaker at 33,439 points. In Europe, the FTSE 100 lost 1.9%, France’s CAC 40 1.46% and Germany’s DAX 1.78%.

SA is grappling with the severity of the third wave of infections, particularly in the country’s economic hub of Gauteng. While Thursday’s case rate subsided from Wednesday’s high, it still accounted for more than half of Africa’s total number of reported daily infections. 

SA is behind in its vaccination programme, with only a little below two-million individuals having been inoculated, well below the 40.2-million it needs to achieve herd immunity. To date, only healthcare workers and those over 60 have been eligible for shots.

“SA needs to urgently speed up its vaccination rate. The economy is not going to see a speedy recovery on a slow vaccination rollout process, while microeconomic reforms aimed at increasingly closing SA’s economy to international trade, such as the department of trade, industry and competition’s proposals, are negatively impacting business confidence,” said Investec chief economist Annabel Bishop.

Bishop is referring to minister Ibrahim Patel’s recent and continuing protectionist activity.

The rand weakened along with other emerging-market currencies. At 5.40pm, it had fallen 1.53% to R14.3077/$, 1.35% to R16.9936/€ and 0.72% to R19.7675/£. The euro fell 0.29% to $1.1875.

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