JSE extends losses on recession fears

South African stocks extended losses at noon on Friday in line with overseas markets as fears of economic recession mount, but traders said details of the United States government’s plan to bail out the economy might help the market stage a recovery.

The all-share index was down 2,23% at 26 437,910, a level last seen in August last year. Resources fell 2,36%, the gold mining index tumbled 3,60% and the platinum mining index was off 1,62%.
Industrials shed 1,78%, financials lost 2,48% and banks weakened 2,47%.

The rand was bid at 7,06 to the US dollar from seven when the JSE closed on Thursday, while gold was quoted at $874,75 a troy ounce from $888,65/oz at the JSE’s last close.

Traders said that the market remained jittery after the US Federal Reserve’s chairperson Ben Bernanke’s comments, poor earnings report from Merrill Lynch and disappointing US housing sales data confirmed fears that the US economy was already in recession.

Investors worldwide have been offloading risky assets, including stocks, on fears that the US economy was not in a healthy state, and that if it slipped into a recession it would drag world markets along with it.

Traders said the market might attempt to stage a recovery later in the day, taking solace from news that the US government was preparing a major fiscal stimulus package.

“While we wait for [US president’s George] Bush to provide details of the fiscal stimulus plan, the sell-off doesn’t stop,” one trader said.

On the resource index, Anglo American tumbled 2,86%, or R10,56, to R359,14 and BHP Billiton slipped 2,76%, or R5,33, to R188.

Paper maker Sappi gave up 1,08%, or 96 cents, to R87,54 and rival Mondi lost 1,33%, or 85 cents, to R63, while Mondi dipped 1,12%, or 61 cents, to R54.

Synthetics fuels maker Sasol added 99 cents to R325,99.

In the news, Kimba Iron Ore expects year-end basic and headline earnings per share to be between 940 cents and 1 000 cents.

In reaction, shares in the company dropped 4,49%, or R12, to R255. 

Platinum miner Anglo Platinum plunged 3,55%, or R39, to R1 059 and Impala Platinum dipped R1,01 to R251.

Among gold counters, AngloGold Ashanti tumbled 4,16%, or R13,99, to R322, Harmony weakened 3,52%, or R2,84, to R77,91, and Gold Fields fell 3,29%, or R3,91, to R115,09.

Elsewhere, banking group Standard Bank lost 2,08%, or R1,99 to R93,51 and FirstRand was 4,22%, or 78 cents, softer at R17,72. - I-Net Bridge

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