Johannesburg - South African stocks fell the most in two weeks amid speculation the US Federal Reserve is leaning toward policy tightening that would reduce demand for riskier assets.
The benchmark FTSE/JSE Africa All-share Index declined as much as 2.1% before paring losses to trade 1% lower at 52 802 by the close in Johannesburg, the lowest since September 1. The 15-member FTSE/JSE Africa Mining Index dropped 2.6% as shares in miners including BHP Billiton, Anglo American and AngloGold Ashanti slumped.
The MSCI Emerging Markets Index of stocks dropped for a second day after comments by Federal Reserve Bank of Boston President Eric Rosengren that the world’s biggest economy could overheat should policy makers wait too long to tighten. The comments came a day after European Central Bank chief Mario Draghi surprised markets by playing down the prospect of further stimulus.
Financial markets on Friday put the probability of a hike in borrowing costs this month at 30%.
“It’s a general risk-off scenario globally sparked by the suggestions that the Fed might hike rates next week after all,” Stephen Meintjes, a senior analyst at Momentum SP Reid, said by phone from Johannesburg. “This is the market just adjusting for the possibility that they might well hike.”
Kumba Iron Ore, Africa’s the biggest ore exporter, slumped 4.2%, while diversified miner Anglo American dropped 2.6%. Naspers, Africa’s biggest company by market value, declined 1.6%.
The US central bank’s policy-setting Federal Open Market Committee meets September 20 to 21 to discuss its target range for overnight interest rates, which has been left unchanged at 0.25% to 0.5% since an increase in December that marked the first in nearly a decade.
A slowdown in economic growth, sluggish inflation and increased uncertainty about the outlook have so far prevented another move.