JSE drifts lower amid US rate hike expectations

(Gianluigi Guercia, AFP)
(Gianluigi Guercia, AFP)

Johannesburg - The JSE drifted lower on Monday morning, among indications that new political uncertainties may unnerve global markets in the coming week.

Markets are also expecting an interest hike in the US soon, which supported the dollar to the detriment of commodity prices - bad news for the prospects of the local resources sector.

Losses on the JSE were however moderate, as relatively robust growth in China is underpinning markets. China is the biggest user of South African commodities, and growth in that part of the world is therefore positive for the local resources economy.

The strong dollar is however not good news for the resources market, as it makes commodities more expensive in other currencies, and by mid-morning the Resources index was already 1.19% lower.

Federal Reserve chair Janet Yellen on Friday all but confirmed market expectations of an interest rate rise in March, barring any sharp deterioration in economic conditions. That supported the dollar.

Most of the other major indices on the JSE were also lower, but the losses were much smaller. By mid-morning the All-share index was 0.34% down at 51 531 points, and the Top 40 index had shed 0.40% to 44 459 points.

The Industrial index had lost 0.28%, but the Financial index was 0.30% up on the expectation of higher interest rates.

The markets will be anxious to see what happens on Wall Street on Monday as US stock futures have dropped as investors weighed the near-certain prospect of an interest rate hike in the United States this month.

Risk appetites also took a hit on rising geopolitical tensions in East Asia, as North Korea fired four ballistic missiles early in the day, while a spat between China and South Korea over missile defence deepened.

President Donald Trump's accusation that his predecessor Barack Obama wiretapped him cast a shadow on US stocks, as some investors view his confrontational style as distracting him from his economic agenda.

European markets opened lower after last week’s strong run. This hurt the dual-listed shares on the JSE, which are also listed in Europe.

One of the biggest losers among those shares was Steinhoff [JSE:SNH], which traded 2.36% softer at R64.06. Steinhoff has been on a steady decline lately and lost more than 7% last week. The share is more than 12% lower over the past 90 days and shed more than 26% over the past year.

Naspers [JSE:NPN] was barely in the black and just 0.11% stronger at R2 105.90, but British American Tobacco [JSE:BTI] lost 0.91% to R808.74.

MTN [JSE:MTN], which  gained more than 8% last Thursday after announcing its results, is giving up most of those gains. Before Monday's trade the share was only 3.3% higher over the last week, losing 1.93% on Monday morning to R121.87.

In the resources sector, Anglo American [JSE:AGL] dropped to below R200 a share again and traded 2.62% softer at R198.03. The share lost 4.6% over the past seven days and 8% over the past month.

BHP Billiton [JSE:BIL], which gave up more than 11% of its value over the previous 30 days, lost 1.62% by mid-morning to R213.56.

Clicks [JSE:CLICKS] was the star performer in the retail sector and reached a new 52-week high, after gaining 1.34% in morning trade to R132.78. Clicks is almost 9% higher over the past month and more than 40% stronger over the past year.

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