MARKET WRAP: JSE slips as trade war uncertainties persist

The JSE ended the week lower on Friday, tracking most global markets as traders remained cautious after conflicting reports regarding the US-China trade war.

Risk appetite abated after US White House trade adviser Peter Navarro said there was no agreement to withdraw tariffs on Chinese imports. That contradicted earlier reports that the two countries had agreed to roll back tariffs as part of a partial trade truce, which is expected to be signed in December.

“Lower tariffs mean higher spending, higher earnings and eventually higher growth for both economies. Lower tariffs also mean massive Chinese purchases for US farmers and [much-needed] support to Donald Trump’s waning popularity,” London Capital Group senior market analyst Ipek Ozkardeskaya said.

“Although most remain cautiously optimistic that a trade deal is still on the horizon, conflicting messages between both sides could strain investor confidence and dampen global sentiment,”  FXTM senior research analyst Lukman Otunuga said.

Shortly after the JSE closed, the Dow was down 0.24% to 27,607.23 points. In Europe, the FTSE 100 lost 0.63%, France's CAC 40 0.12% and Germany's DAX 0.33%.

Earlier, the Shanghai Composite fell 0.49% and Hong Kong's Hang Seng 0.7%, while Japan's Nikkei 225 rose 0.26%. 

The rand was on track for its best weekly performance in three, up 1.36% on Friday evening. The local currency has been the best-performing among emerging-market currencies tracked by Bloomberg over the last five days.

However, at 5.16pm, the rand had weakened 0.48% to R14.8119/$, 0.26% to R16.3323/€ and 0.46% to R18.9817/£. The euro had weakened 0.22% to $1.1026.

Gold was down 0.32% to $1,463.74/oz, set for its biggest weekly drop in over two years, while  platinum dropped 2.33% to $887.38. Brent crude lost 2.15% to $60.94  a barrel.

The R2030 government bond was weaker, with the yield rising 8.5 basis points to 9.17%. Bond yields move inversely to bond prices.

The JSE all share fell 1.51% to 56,617 points and the top 40 1.59%. Industrials fell 1.91% and gold miners 3.43%. 

Gold Fields dropped 6.31% to R76.45, Harmony 3.96% to R45.89, AngloGold Ashanti 2.34% to R283 and Sibanye 2.16% to R26.77.

Among diversified miners, Glencore fell 1.69% to R48.28, BHP 1.61% to R327.55, Anglo American 1.39% to R390.53 and South32 1.39% to R27.64.

Tiger Brands gained 6.23% to R234.50. The packaged-goods company said on Friday that it was considering disposing of its value-added meat products business.

Richemont dropped 5.73% to R110.77 The company said on Friday that sales in Hong Kong decreased by double-digits in the six months to end-September.

Statistics SA is expected to release retail sales for September next week. The median forecast is for retail sales to have risen 1.9% from 1.1% in August, according to Bloomberg.

Also in the coming week, Stats SA is set to publish mining production for September. Mining activity is expected to have contracted 2.4% after shrinking 3.2% in the previous month, according to a Bloomberg median forecast.

“The mining sector’s performance has been affected by the weakening global economic backdrop, with both global growth and global trade momentum slowing to the weakest rate since the global financial crisis,” Investec economist Kamilla Kaplan said.

“The effects of the more adverse global economic backdrop are exacerbated by domestic constrains that include insufficient electricity supply and rising operating costs, ” Kaplan said.

- BusinessLIVE