The JSE headed back below the 25 000 level on Monday hit by the double whammy of weaker world markets and lower commodity prices. A softer rand did little to stem the bourse’s losses.
The all-share index tumbled 2,51% to close at 24 919,460. It was its lowest close since January 12. Resources retreated 2,63%, the gold mining index surrendered 2,48% and the platinum mining index plunged 4,15%. Industrials and financials fell 2,12% and 2,98% respectively, while the banks index dropped 4,24%.
The rand was bid at R7.47 per dollar from R7.34 when the JSE closed on Friday, while gold was quoted at $635,50 a troy ounce from $652,40/oz at the JSE’s last close.
On the all-share index, 133 shares were down, 13 were up and 17 were unchanged. The entire top-40 index ended lower.
“We were mainly following a retreat on world markets,” a dealer said. “Concerns about global growth have caused a sell off in equities worldwide.”
He added that commodity prices were also lower, which was another big negative for the JSE.
On Friday afternoon, the weaker rand had fuelled some buying of rand hedge stocks, resulting in the market ending a three-day losing streak. However, the JSE had on Monday surrendered these gains and then some, he said.
The dealer said that it was difficult to ascertain whether the sell-off would be prolonged. “For those participants looking for an entry into global markets, I’d recommend patience before fresh buying starts,” he concluded.
The pullback on the JSE began last Tuesday when the Chinese market dived almost 9%. Although the local market bounced slightly on Friday, aggressive selling was again seen on Monday.
Prior to Tuesday, the JSE had hit record highs in seven out of nine sessions. “This is a mini-crash. We are seeing a lot of selling coming through,” a second dealer commented. “I don’t think the weakness is over. There is still a lot of negativity coming through. I think a big shakeout is under way.” — I-Net Bridge