JSE and world markets slump on fear over slowdown in China’s economy

THE JSE closed weaker yesterday as global markets retreated amid concerns about a slowdown in China. After dropping nearly 3% in morning trade in reaction to a record low rand against the dollar‚ the all-share index did come back somewhat before weakening again as US markets opened lower. Chinese stocks had to be suspended for the second time this week after the Shanghai composite index fell 7%‚ causing a new circuit-breaking mechanism to trip. This follows Chinese authorities fixing the yuan at a weaker-than-expected level‚ fuelling further risk aversion across the region. The Hong Kong Hang Seng index ended 3.09% lower and the Nikkei 225 lost 2.33%. European markets were also sharply lower.

At the JSE’s close, the FTSE 100 was 2% off and the Paris CAC 40 had lost 1.77%. The Dax was 2.38% lower. Global markets have also been spooked by geopolitical tension in the Middle East‚ a claimed successful hydrogen bomb test by North Korea on Wednesday, and oil prices hitting fresh 11-year lows. The Brent crude price plunged more than 5% to $32.15 per barrel in early morning trade‚ but had recovered to $33.69 at the JSE’s close. At the close, the JSE all share closed 2.1% lower at 48 052.80 and the blue-chip top 40 was down 2.18%. Banks led the losses‚ shedding 2.9%‚ followed by resources down 2.86%. Financials dropped 2.70% and platinums shed 2.03%. Industrials ended the day 1.77% lower‚ but the gold index added 4.98%. Nedbank strategic research head Mohammed Nalla said the economic outlook for the year remained poor. “The discouraging policy backdrop is unlikely to improve in the near term,” Nalla said.