JOHANNESBURG - In reaction to the acceptance last week in Parliament of the motion that the constitution must be amended to make way for land redistribution without compensation, foreign and domestic investors locally became nervous.
Together with the hawkish tone of the minutes of the US Federal Reserve and Friday’s US President Donald Trump’s trade war threat, another storm had developed on the local financial markets.
Share prices on the JSE markets once again came under pressure. The rand lost ground and government bonds weakened substantially.
The silver lining on the dark clouds, however, was the announcement that the price of petrol in Gauteng would decrease by 36cents a litre and that of diesel by 47c, from Wednesday. This will go far as a buffer against the 52c tax increase a litre on fuel that will be introduced in April.
In the US, the fears of four interest rate increases in 2018 and the proposed tariff increases on steel imports by the Trump administration had let to havoc on international share markets.
On Wall Street on Friday, the Dow Jones industrial index had opened lower by more than 325 points on 24283 points. This was 1026 points, or 4.1percent, lower than the previous Friday. This bearish sentiment quickly moved over to almost all other global equity markets.
In Germany, the Dax ended the week 4.3percent lower and in the UK, the FTSE lost 2.1percent. The Nikkei225 dropped 3.2percent last week.
On the JSE, the all share index wiped out all its gains from the previous week as the index ended 1.7percent lower on Friday. The level of 57744 pointsis now almost 2000 points (3percent) lower than the opening number in January.
Industrial shares lost more than 2percent for the week, while financials (-1.1percent) and resources (-1.4percent) were also much weaker.
The rand weakened substantially last week. It depreciated by 42c, or 3.7percent, against the dollar during the week and traded at R11.99 at 5pm on Friday.
Against the euro, the rand lost 53c, or 3.8percent, to trade at R14.77 and against the pound it weakened by 34c to R16.53.