MARKET WRAP: JSE drops as investors mull conflicting trade-war reports

The JSE closed in negative territory on Thursday as investors digested mixed messages from the US and China as the trade war between the pair stretches into its 17th month. 

China’s commerce ministry said on Thursday that tariffs should be lowered accordingly if the two countries reach a trade deal. It also said that negotiators are maintaining close communication.

Bloomberg reported earlier that the two economic superpowers are moving closer to sealing a trade deal and agreeing on the amount of tariffs that should be withdrawn as part of the first phase of the deal. The latest reports have renewed hope that the US will withdraw the December 15 tariff hike on $156bn worth of Chinese imports. 

“This tariff would end up punishing the US consumer and [US President Donald] Trump wants to see a strong stock market with a happy consumer as we near the 2020 election,” said Oanda senior market analyst Edward Moya.

Earlier in the week, Trump said the trade war may only be resolved after the 2020 US election, while China warned that the US legislation calling for action against the treatment of the Uighur Muslim minority in China could harm bilateral relations between the two countries.

“The market now seems to be pricing in the signing of a ‘skinny deal’ soon, which includes the rolling back of some tariffs, then signing a big trade deal at the end of 2020 after the elections — assuming that Trump gets re-elected,” fund manager Vestact said in a note.

Shortly after the JSE closed, the Dow had lost 0.25% to 27,581.80 points. In Europe, the FTSE 100 was down 0.62% and Germany’s DAX 30 0.29%, while France’s CAC 40 was up 0.48%. 

Earlier, the Shanghai Composite rose 0.74%, Hong Kong’s Hang Seng 0.59%, and Japan’s Nikkei 225 0.71%. 

The SA Chamber of Commerce and Industry’s business confidence index rose to 92.7 point in November from 91.7 in the previous month.

The SA Reserve Bank said earlier that the current-account deficit narrowed to 3.7% of GDP in the third quarter, from 4.1% previously, while a narrowing to 3% was expected. “The rand largely ignored the outcome, still driven by the seasonal global risk-on period,” Investec economist Annabel Bishop said.

At 5.17pm, the rand had weakened 0.56% to R14.6714/$, 0.74% to R16.2813/€, and 0.83% to R19.276/£. The euro was up 0.18% to $1.1097. 

The R2030 government bond was weaker with the yield rising four basis points to 9.22%. Bond yields move inversely to their prices.

Gold was up 0.19% to $1,477.06/oz while platinum was down 0.52% to $893.63. Brent crude added 0.92% to $63.56 a barrel. 

The JSE all share fell 0.44% to 54,779.8 points and the top 40 0.45%. Banks lost 1% and industrials 0.75%.

Glencore dropped 5.71% to R42.57, its biggest one-day loss in more than four years, after the diversified miner said on Thursday that UK’s Serious Fraud Office (SFO) had opened an investigation into suspicions of bribery by the company.

Building material supplier Afrimat said on Thursday that its construction index rose 5.1% in the third quarter of 2019. Its share price was unchanged at R32.

- BusinessLIVE