Global risks put pressure on JSE

The JSE closed weaker on Friday amid mixed global markets as investors digested risks from China and prospects of a slowing global economic recovery. The all share index ended the week 0.71% lower, with Friday’s losses led by industrial metals and resources, which dropped a sharp 5.59% and 3.91%, respectively.

The JSE closed weaker on Friday amid mixed global markets as investors digested risks from China and prospects of a slowing global economic recovery, among others.

The all share index ended the week lower, with Friday’s losses led by industrial metals and resources, both of which dropped sharply.

Sentiment was driven by continuing concerns about the Covid-19 Delta variant and its effect on global economic recovery, the prospects for tighter monetary policy in the US, and worries about the Chinese government’s stricter regulations.

Authorities in China have now turned their attention to casinos, with officials in the gambling hub of Macau announcing a review for the industry to be regulated, including the appointment of government representatives to “supervise” operators.

“It’s been quite an interesting week in the markets, with sentiment flipflopping on a daily basis,” said Oanda senior market analyst Craig Erlam. “There’s no doubt the downside risks are piling up and are coming from a variety of areas, be it inflation/monetary tightening, Covid, China’s nonending regulations; the list goes on.”

“I think the risks are too hard to ignore at the moment, especially if the Fed and other central banks are so intent on removing stimulus measures,” he said. “And it’s not the fact that economies around the world aren’t doing well, or that many of these countries now have high vaccination rates, but there’s so much uncertainty in the months ahead, the timing strikes me as a little odd,” said Erlam.

The JSE all share fell 0.71% to 62,863.64 points and the top 40 0.86%. The industrial metals and mining index dropped 5.59% and resources 3.91%. Retailers gained 1.08%, industrials 0.9%, precious metals 0.68% and listed property 0.67%.

At 5.20pm, the Dow Jones industrial average was 0.37% weaker at 34,624 points.

The coming week will be dominated by central bank interest rate decisions, including the US, Japan, the UK, SA, Brazil and Turkey. It is widely expected the SA Reserve Bank will keep the repo rate on hold at 3.5% at its monetary policy committee meeting.

By 5.29pm, the rand had weakened 1.18% to R14.7577/$, 1.01% to R17.3175/€ and 0.88% to R20.2957/£. The euro was 0.28% weaker at $1.1735.

Gold was little changed at $1,752.50/oz, while platinum gained 1.88% to $948.47. Brent crude lost 0.98% to $74.86 a barrel.