MARKET WRAP: JSE subdued as trade tension weighs on markets

03 September 2019 - 19:47 By Phumi Ramalepe and Odwa Mjo
. Picture: MICHAEL BRATT
. Picture: MICHAEL BRATT

The JSE closed flat on Tuesday, while most global markets remained in negative territory as the US and China struggle to find common ground as the trade war drags on. 

News reports that the two economic superpowers have not yet agreed on a date to resume trade talks in September have added to investors' fears about the effect of the prolonged trade war on the global economy. US President Donald Trump warned on Tuesday that the negotiations would become tougher should the trade war stretch into his second term, if he is re-elected. 

“The ongoing trade war has already sent the economic fundamentals tumbling in the emerging-market giant. Although the probability of a full trade agreement between the US and China remains low, China understands that avoiding a further erosion in diplomatic relations is crucial for the sake of the global economy,” London Capital Group senior market analyst Ipek Ozkardeskaya said.

 

Shortly after the JSE closed, the Dow was down 1.40% to 26,033.76 points. In Europe, the FTSE 100 lost 0.37%, France's CAC 40 0.48% and Germany's DAX 30 0.24%. 

Locally, data from Statistics SA showed that GDP grew 3.1% in the second quarter from a contraction of 3.1% (revised down from 3.2%) in the first quarter. This is above economists' expectations of an expansion of 2.5% quarter on quarter, according to a Bloomberg consensus. The mining sector grew 14.4% and the manufacturing sector rose 2.1%. 

“The SA economy remains in a fragile state, operating against a backdrop of subdued activity and persistently low business confidence. That continues to weigh heavily on future growth prospects, with GDP unlikely to be higher than 0.7% for the year,” Investec economist Lara Hodes said. 

At 5.29pm, the rand had firmed 0.69% to R15.1471/$, 0.72% to R16.6076/€ and 0.56% to R18.3002/£. The euro was flat at $1.0964. 

Gold was up 1.14% to $1,546.50/oz and platinum 2.68% to $955.98. Brent crude lost 1.64% to $57.64 a barrel. 

The JSE all share was flat at 54,742.10 points and the top 40 was unchanged. Resources fell 0.71% while banks rose 1.06%.

Cashbuild gained 1.28% to R238 after the building material retailer said on Tuesday that its operating profit increased 3% in the year to end-June. Its headline earnings fell 6% to R17.51.

TFG climbed 5.9% to R157.63 after the retailer declared a dividend of R4.50 in the first 21 weeks of the 2020 financial year, an increase of 4.7%.

WBHO rose 4.22% to R105, despite saying on Tuesday that it cut its dividend 60% to R1.90 in the year to end-June while it continues to fight cost overruns at a roads project in Australia.

Aspen jumped 7.26% to R82.41 after the drugmaker said on Tuesday that sales of noncore assets led to a decrease in its net debt to R40bn in the year to end-June. 

DRD Gold rose 5.19% to R7.10 after it said on Tuesday that headline earnings per share jumped 541% to 10.9c in the year to end-June, from 1.7c in the previous period. 

Fortress B-shares dropped 6.74% to R10.10 after the diversified property company said on Tuesday that its dividend per share for its B-shares fell 13.1% to R1.55 in the year to end-June. 

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