Platinum miners and banks led the rout on the JSE on Friday, with the JSE All Share index closing 2.45% lower at 67,978 points as inflation fears gripped world stock markets and sapped investor confidence.
Sasfin chief global equity strategist David Shapiro said “globally investors are extremely nervous and until they are convinced or satisfied that inflation has peaked, markets will remain volatile”. He said inflation could hit its peak next month or six months away, no-one really knows.
“When markets are tetchy investors only hear the bad news.”
He said markets were also questioning the US Federal Reserve’s decision to enact a lower than expected rate hike on Wednesday when it decided to raise interest rates by 50 basis points instead of the anticipated 75 basis points.
Many fear, however, that the Fed will may have to enact a 75 basis point hike at some point, with even former Fed governors questioning the policy, Shapiro said.
“Now one really seems to have a grip of understanding of inflation which is also sapping investor confidence.”
Speaking about the JSE’s day in the red and other market falls Shapiro said: “We’re experiencing the perfect storm: the China lockdown, Russian invasion Ukraine and the Fed's decisions.”
The JSE top 40 index was 2.56% lower, the precious metals and mining index shed 3.8%, banks declined 3.2%, financials fell 2.6% and industrials retreated 2.3%.
Anglo American Platinum was the biggest loser, falling 6% to R1,609.64 — the most in ten days. Fellow PGM miner Implats had its worst day in two weeks, down 5.6% to R186.92 as global recession fears raised concerns.
PGM metals are used in car exhausts and lower vehicle sales globally would reduce demand for these commodities.
Kumba Iron Ore — which produces the raw material used in steel — lost the most in a fortnight, down 3.77% to R494.07 amid concerns of a slowdown in China after the lengthy lockdown in Shanghai and concerns about Covid-19 cases in the capital.
The platinum price is down 1.16% at $974 an ounce. It has now fallen more than 29% in the past 12 months.
Investec chief economist Annabel Bishop said in a note that commodity prices are expected to drop further as global economic growth expectations have weakened, which will aid a moderation in US and global inflation.
By 6.15pm, European markets were lower, tracking their Asian counterparts, with the FTSE falling 1.5% Paris’s CAC 1.7% lower and Germany’s DAX off 1.6%. In the US, the Dow Jones industrial average had fallen 0.8%.
The rand was 0.35% firmer at R15.9384/$, and it gained 0.33% to R19.6923/£. It was little changed at R16.8596/€.
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