The JSE was awash in red in noon trade on Wednesday as global markets tumbled on Germany's shock announcement of a ban on naked short-selling of certain financial instruments.
By 12:00 the JSE all share index was down 2.02 percent, with resources 2.92 percent weaker, platinum miners off 3.16percent and gold miners 1.82percent lower.
Banks were 1.41 percent weaker, financials were down 1.32 percent and industrials were off 1.50 percent.
The rand was bid at 7.76 to the dollar from 7.55 at the JSE's close on Tuesday.
Gold was quoted at US$1 208.09 a troy ounce from US$1 247.65/oz at the JSE's last close. Platinum was at $1 615/oz from $1 685.50/oz at the JSE's last close.
"We're pretty much just following the global turmoil," an equities trader lamented.
Traders pointed out that the usually beneficial effects of a weaker rand were being negated by lower commodity prices.
Dow Jones Newswires reports that European stocks, the euro and core European government bond yields tumbled Wednesday as investors worried that Germany's ban on the naked short selling of certain euro-zone debt instruments and credit default swaps, as well as some financial stocks, could hurt the global economy.
Market participants were sceptical over the ban, which many believe might be a precursor to something bigger.
"There is now a real concern that this unilateral ban comes ahead of some really unpleasant news," said David Morrison, market strategist at GFT.
"After all, why else rush out this decision?"
Traders said the main worry is that another major financial institution might be in trouble.
"Of course, there may be nothing, in which case the German move looks even more ridiculous," said Morrison.
The German ban put the euro in focus again, sending the currency to a fresh four-year low against the dollar in Asian trade, on fears that the new regulations could complicate managing the risk of holding the currency.
Asian markets ended broadly lower Wednesday as Germany's decision to ban naked short-selling in certain financial instruments damped investor confidence.
Exporters with exposure to Europe and resource stocks ranked among the day's losers as the euro tumbled further against the US dollar.
"When there are restrictions such as these, risk appetite grows weaker...in the short-term, people cut down their positions, which causes market volatility," said Yoji Takeda, head of Asian equities at RBC Investment.
Takeda also said Asian exporters may not see a significant earnings downgrade, as though they would be hurt by the weaker euro, there wasn't evidence that European demand itself has slowed.
Japan's Nikkei Stock Average fell 0.5 percent, China's Shanghai Composite and Taiwan's Taiex dropped 0.3 percent each, Australia's S&P/ASX 200 fell 1.9 percent, South Korea's Kospi gave up 0.8 percent and Hong Kong's Hang Seng Index declined 1.8 percent.
In afternoon trading, India's Sensex lost 2.8 percent and Singapore's Straits Times Index shed 2.5 percent, extending their losses as European stocks declined in
early trading. The Dow Jones Industrial Average futures also fell sharply in late Asian trading, and were 81 points lower in screen trade.
"[Germany's] action appears to have backfired, fuelling uncertainty over its impact, potential replication by other European countries, how and to whom it would apply as well as how it will be enforced," said Credit
Agricole in a note.
"Once again a single euro-zone country has enforced a
unilateral measure in an uncoordinated fashion. It is unclear whether other euro zone countries will follow Germany's actions but it is clear that the measure has led to a further bailout from European asset markets," the report said.
Meanwhile, US stocks are picked to open sharply lower Wednesday following Europe's decline on the shock announcement of a ban on naked shorting of certain financial instruments from the German Finance Ministry, says David Morrison of GFT.
He calls the DJIA down 80 at 10 430 and the S&P 500 off 11 at 1110. The move has unsettled investors as they worry why Germany has acted so suddenly and unilaterally, he says.
"Many are concerned that this is pre-emptive action ahead of a further disruption - speculation swirls around the failure of another major financial institution, or even a change in euro zone membership," he adds.
On data plate, CPI data is at 1230 GMT and FOMC Minutes at 1800 GMT.
On the JSE, Anglo (AGL) was 8.34 rand or 2.89 percent weaker at 280.71 rand, while BHP Billiton (BIL) lost eight rand or 3.78 percent to 203.50 rand.
Sasol (SOL) was down 5.45 rand or 1.91 percent to 279.55 rand.
Platinum miner Anglo Platinum (AMS) shed 25.98 rand or 3.39 percent to 741.02 rand, Impala Platinum (IMP) was 5.83 rand or 2.99 percent weaker at 189.37 rand, Northam (NHM) gave up 123 cents or 2.62 percent to 45.77 rand, Aquarius (AQP) was off 1.41 rand or 3.28 percent at 41.59 rand and Lonmin (LON) was off nine rand or 4.66 percent at 184 rand.
Among gold miners, AngloGold Ashanti (ANG) declined 5.59 rand or 1.74 percent to 316 rand and Harmony (HAR) shed 1.40 rand or 1.81 percent to 75.90 rand.
GoldFields (GFI) weakened 1.99 rand or 1.97 percent to 99.20 rand.
Kumba Iron Ore (KIO) weakened by 10.90 rand or 3.33 percent to 316.60 rand, Highveld (HVL) was off 1.68 rand or 2.10 percent at 78.16 rand and Exxaro (EXX) was down 3.51 rand or 3.16 percent at 107.49 rand.
Among retailers, Lewis (LEW) was 40 cents weaker at 59.02 rand.
On Wednesday, the household furniture, electrical appliances and home electronics retailer reported headline earnings per share of 642.6 cents for the year ended March 31, 2010, from 630.5 cents previously.
Earnings per share increased 5.6 percent to 672 cents, from
earlier.
Lewis lifted revenue by 8 percent to 4.1 billion rand in the year to March 2010 as the early signs of improving economic conditions started to benefit consumers, while improved margins increased the group's profitability by 9 percent, it said.
The total dividend has been maintained at 323 cents per
share for the year, comprising an interim dividend of 144 cents and final dividend of 179 cents.
Telecommunications group MTN (MTN) was down 2.36 rand or 2.25 rand at 103.70 rand and Vodacom (VOD) was off five cents at 59.50 rand.
Banker Standard Bank (SBK) was 1.50 rand or 1.35 percent weaker at 109.85 rand, Nedbank (NED) was off 2.48 rand or 1.77 percent at 138.02 rand, and Absa (ASA) shed 2.64 rand or 1.95 percent to 132.61 rand.
FirstRand (FSR) was 25 cents or 1.24 percent weaker at 19.90 rand.
Media group Naspers N (NPN) gave up 8.21 rand or 2.67 percent to 299.79 rand. - I-Net Bridge
