JSE stocks fall after disappointing data out of China
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STOCKS on the JSE fell to its lowest level in more than a week yesterday following disappointing economic data from China, just after a recent record high of 69 814 points last week.
The JSE All Share index declined almost 1 percent to around 68 703 index points during intra-day trade yesterday, its lowest in 10 days, before closing
The bourse was dragged down by tech heavyweight tech giant Naspers, which plunged 6.69 percent to R2 619 per share and Sasol, which eased 4.94 percent to R206 per share.
Old Mutual Wealth investment strategist Izak Odendaal said South African equity returns were trending lower even before Covid-19 hit, but the global economic recovery was bailing the JSE out.
“The JSE started rallying in line with global equity markets, with the unexpected commodity boom adding rocket fuel,” he said.
“Local equities would end the 2021 calendar year in positive territory and, and at the end of July, the five-year annual return from the All Share was 8 percent, ahead of cash and inflation.”
But investors yesterday were weighing some disappointing data out of China and the ongoing crackdown on the tech sector in that country.
Data yesterday showed that China’s industrial output growth was at an 11-month low in July while the unemployment rate inched up to a three-month high of 5.1 percent in the same period.
China’s retail sales grew the least in 7 months in July, after consumption moderated during the latest Covid-19 outbreaks in some provinces, while fixed investment rose less than expected.
At the same time, worries about the impact of the Delta variant on global economic growth persisted, while a third wave in Western Cape and KwaZulu-Natal provinces was declared.
Experts on the disease even warn that it was possible that further new variants could emerge that were resistant to the current vaccines, potentially damaging economic recoveries.
Meanwhile, the rand was slightly weaker yesterday, easing 0.20 percent to R14.77 against the dollar.
Investec chief economist Annabel Bishop said the domestic currency averaged R14.55 to the greenback to date this quarter, and further volatility was likely.
Bishop said the rand continued to be buffeted by international forces on the shift in market perceptions about a quicker advent in US tapering, but offsetting this was reassuring comments from South Africa’s finance minister on policy continuity in fiscal restraint.
“The rand has been volatile, weakening on fears the US will hike interest rates before 2023,” she said.
“The rand could pull stronger towards quarter end, and into next quarter, although long-term is still likely to still be at risk of weakness.”