BD: JSE closes weaker on risk-off sentiment as global concerns prevail
THE JSE closed weaker for a second consecutive day at a two-week low as negative global developments and a warning by the Reserve Bank on possible future interest-rate hikes weighed on the market.
The Reserve Bank decision to keep rates unchanged was widely expected. Some profit-taking was evident among banks and financials with retailers lower on the more hawkish Reserve Bank position.
The deteriorating geopolitical situation in the Middle East after Saudi aircraft bombed positions in Yemen sent global markets lower. Higher oil prices‚ concerns over the Greek debt situation and continued uncertainty about when the US Fed will hike interest rates added to the negative sentiment.
The Dow Jones industrial average was 0.36% lower at the JSE’s close. The Dow weakened on Wednesday after tech stocks were sold off. In Europe the FTSE 100 traded 1.33% lower and the Paris CAC was 1.23% off.
At 5pm the all share was 1.36% weaker at 51‚603.9 points and the blue-chip top 40 lost 1.55%. Industrials were 1.55% lower and resources weakened 1.18%. Financials dropped 1.01% and banks shed 0.83%.
Gold was the only bright spot as the index closed 3.01% up. Signs of investor stress saw the spot price of gold rally more than 1.4% earlier to trade at $1‚212.03 per fine ounce. Spot Gold last closed higher than $1‚200 on March 4‚ and was 0.85% higher at $1‚205.57 per fine ounce at the JSE’s close.
Vunani Private Clients analyst Singa Gungqisa said the JSE was only partly down on the Reserve Bank decision.
"The market consensus was for rates to be kept unchanged‚ so the decision was no surprise."
Resources were very volatile on the day‚ rising more than 1% earlier‚ but falling 1.18% at the close.
"There was no company-specific news that dragged mining stocks down as most top 40 stocks were negatively affected."
But he said foreigners were clearly sellers of resources in a global risk-off environment which emanated from the US after the Dow fell 1.62% on Wednesday. Volatility increased as the tech-heavy Nasdaq saw its sharpest decline in almost a year on Wednesday.
Among industrials Imperial Holdings dropped 2.46% to R187 and Bidvest was 2.39% lower at R317. Diversified industrial conglomerate Remgro shed 2.17% to R259.95.
Market heavyweight Naspers closed 2.19% lower at R1,731.25.
BHP Billiton led the losses among the global mining houses, closing 2.01% off at R272.50. Glencore was 1.56% lower at R52.37.
AngloGold Ashanti rose 4.08% to R122.98, with Gold Fields adding 3.11% to R54.65.
Nedbank lost 2.07% to R246.50 despite Thursday being the last day to trade for a dividend. Standard Bank shed 1.05% to R166.73 after hitting a high of R170 on Wednesday. Capitec bucked the trend, closing 1.22% higher at R496.
General retailer Woolies dropped 3.23% to R82.65 and Mr Price shed 3.99% to R244.50. Massmart Holdings closed 1.81% off at R147.77 and Shoprite was 2.04% lower at R155.70.
