JSE slips in line with Asian Pacific peers

Johannesburg - US markets sold off on Wednesday as investors continued to fear the effects of inflation on the US economy. 

US 10-year bond yields climbed above the 3% level, sending shivers in the market. Asian and Asia pacific markets were lower on the day as investors sought safety in the greenback. 

The heavyweights in the Dow Industrial Index continue to produce strong results as US-based aeroplane manufacturer Boeing [NYSE:BA] produced numbers that beat market estimates.

Boeing is at the centre of the Sino-American trade war as China has threatened to cancel orders with Boeing, and has indicated it would prefer to buy new aircraft from European manufacturer Airbus.

Boeing’s outlook remains positive; however, if President Donald Trump goes ahead with the tariffs on China, the aeroplane manufacturer is set to hit some turbulence.   

The local market opened the day weaker, moving in line with its Asian Pacific counterparts. The FNB Consumer Confidence Index recorded its biggest move for the first quarter of the year, adding 34 points to the index from the last quarter's recording of -8.

The increase in consumer confidence may simply be attributed to the change in the political landscape and the perceived growth prospects for South Africa.

In corporate news, gold miner Gold Fields [JSE:GFI] released their production update today. The miner indicated that production had declined by 1% for the quarter ended March 31 2018.

CEO Nick Holland cited enduring concerns the business has around their South Deep mine, which continues to require more capital without any meaningful signs of a turnaround in output and profitability. 

The gainers on the day were Afrimat [JSE:AFT], up 6% today to trade at 3 074c. Strong gains were also recorded in Clientele [JSE:CLI], Sun International [JSE:SUI], and British American Tobacco [JSE:BTI] up 3.59%,3.51% and 3.32% respectively. 

The bourse was mainly covered in red today as some rand hedges provided a glimmer of hope for the market.

Financial shares continued to sustain losses on the day. Sanlam [JSE:SLM], Capitec [JSE:CPI], Nedbank [JSE:NED], and Investec PLC [JSE:INP] shed 3.64%, 3.2%, 2.9% and 2.27% respectively.  

The major losers on the day were Royal Bafokeng Platinum [JSE:RBP], Tradehold [JSE:TDH], African Rainbow Minerals [JSE:ARI] and Barloworld [JSE:BAW].

RBP slid 8.26% to trade at 2 309c as the platinum giant finds the going tough with commodity prices continuing to fluctuate. ARM and BAW shed 6.56% and 6.14% on the day, as TDH continues to find firm footing as it plunged 7.65%.

The JSE Top-40 Index was lower on the day to trade at 50 234 points, shedding 1.25% from its close yesterday. The broader JSE All-Share Index was down 1.19% to trade at 56 987 points.

The Resource20 Index was weaker by 1.77%, while the Industrial Index was down 0.9% as the Financial Index eased 1.54%.

The rand was softer again today and was trading at R12.48/$ at 17:00 CAT - a move of about 14c from yesterday's level at the same time.

South African 10-year bond (R186) yields continued their move higher today and were bid at 8.30% up from 8.22% yesterday. US 10year treasury yields continued to trade above the 3% mark today, as the benchmark treasuries remained firmly bid as the market cited higher inflation concerns.  

Bullion was softer on the day as commodities continued to feel the pressure of the firmer dollar. At the time of writing, gold was trading at $1 320 per ounce, but it appears as if the market is favouring Bitcoin [BTCUSD] as a safe haven asset. 

The cryptocurrency has recovered from its recent lows of $6 800 and is now trading at $8 925/coin at the time of writing.

Brent crude was softer on the day as it joined a basket of commodities that were crushed as the dollar advanced. A barrel of Brent crude was changing hands at 72.81 at 17:00 CAT, off its intraday highs of $73.20/barrel.