The JSE lost ground in Wednesday‚ reflecting the poor sentiment on world equity markets
Weaker than expected manufacturing data in China‚ the world’s largest consumer of commodities‚ created a backdrop for investors to take some profits in resources shares‚ which have run hard of late.
China’s official purchasing managers’ index fell to 50.3 points in February‚ its lowest level in 18 months‚ from 51.3 January. Analysts said the data could have been skewed by seasonal factors‚ following the lunar new year celebrations.
The resources index‚ which includes the likes of Anglo American and BHP‚ dropped 1.84%‚ leaving the all-share index down 1.04% at 58 414.60 points by lunchtime.
The resources sector was also affected by a big drop in certain metal prices late on Tuesday. The platinum price was marginally lower on the day‚ at $981.61 an ounce‚ after having dropped nearly 2% overnight‚ due to a strong dollar environment.
Financial stocks fell‚ along with retailers‚ signalling a loss of momentum after a good recent run inspired by optimism that the economy will improve under the leadership of President Cyril Ramaphosa.
“It certainly feels like a morning after‚ given the rally we have seen in the wake of the political changes‚” said Nick Kunze‚ market analyst at Bridge Fund Managers.
“The key question then becomes: where to from here? My guess is that corporate earnings will guide us in the short term.”
Europe’s major markets were lower at midday‚ following a negative lead from Asia‚ while US stock futures signalled a weaker opening on Wall Street.
The prospect of more increases in US interest rates than is currently projected appears to be unnerving equity markets.
The jitters follow US Federal Reserve chairman Jerome Powell’s speech to Congress on Tuesday‚ which the markets perceived as more hawkish than expected. The implication is that there may be more than the three increases in 2018 that have already been priced into markets.
BHP shed 2.74% to R242.11‚ Anglo American 2.75% to R292.86 and Kumba Iron Ore 3.34% to R345.99. Exxaro slumped 10.3% to R132.17‚ partly due to its trading ex-divided. AngloGold Ashanti dropped 2.68% to R108.04.
Financial services group MMI relinquished 2.51% to R21.73.
Steinhoff dropped 4.5% to R5.52‚ Massmart 2.03% to R163.77 and Spar 2.15% to R217.86.
Resilient was off 2.43% to R69.85 and Nepi Rockcastle 2.24% to R122.69.
Naspers dropped 1.44% to R3‚263‚98 but Bid Corporation rose 1.66% to R271.45.
Source: TMG Digital.