JSE opens weaker on US rate hike jitters

The JSE opened lower on Monday following sharp losses on Wall Street on Friday as a US rate hike seems increasingly likely.

Losses on the JSE were across the board with the weaker rand failing to support rand hedges.

At 9.32am‚ the all share was 1.80% down at 52‚384.70 points and the blue-chip top 40 dropped 1.83%. Resources were down 3.03% and the gold index shed 2.89%.

Platinums were 2.42% weaker and banks dropped 2.01%. Financials were 1.92% off.

The Dow Jones industrial average closed 2.13% lower on Friday.

Asian markets were sharply down with the Nikkei 225 losing 1.73% and the Hang Seng dropping 2.88%.

Market jitters increased on Friday after US Federal open market committee member Eric Rosengren‚ a noted dove‚ left the door open for a rate hike next week.

This followed previous dovish comments by committee members while the European Central Bank’s (ECB’s) reluctance to announce further stimulus measures on Thursday was seen as another hawkish turning point for central banks.

Momentum SP Reid said in an early morning note that the effect of comments from Fed officials on the potential for an adjustment to monetary policy in the near term had driven global risk assets.

It said Rosengren’s speech was taken as the final confirmation of the increased likelihood of an interest-rate hike in the months ahead.

The news of the ill-health of presidential candidate Hillary Clinton had further undermined overall market sentiment‚ Momentum said.

Mining stocks received scant support from spot prices‚ despite the rand weakening to R14.47/$ in early morning trade from a close of $14.3906. Spot gold was flat on Monday morning at $1‚328.85/oz. Platinum dropped 1.13% to $1‚052.25.

BHP Billiton retreated 4.14% to R185.87 and Anglo American shed 3.69% to R155.43.

Sasol lost 1.40% to R365.10. The group reported annual headline earnings per share (HEPS) to end June weakened to 41.40c per share from 49.76c per share in 2015.

British American Tobacco was 0.92% lower at R886.69.

AngloGold Ashanti dropped 3.80% to R230.50.

Among banks‚ Standard Bank weakened 2.02% to R136.84.

Sanlam retreated 3.91% to R62.37.


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