The JSE fell the most in two weeks on Thursday, tracking weaker global markets in what has been a tough month, with investors continuing to price in further pain.
Markets have endured a torrid first half of the year that has been dominated by surging inflation, rate hikes, Russia’s ongoing war in Ukraine and Covid-19 lockdowns in China — all of which have helped fuel fears of a global recession.
“Stock markets have fallen heavily in June so it seems only fitting that they’re ending the month with big losses as reality continues to bite,” said Oanda senior market analyst Craig Erlam.
“There’s no getting away from recession chat and while the heads of the world’s leading central banks didn’t exactly fuel that during their panel discussion on Wednesday, they didn’t do anything to dispel it either,” Erlam added, referring to the annual ECB Forum on Central Banking in Portugal. “They all know that there’s a strong likelihood of recession this year or next and investors are increasingly accepting that fate as well.”
The main message at the forum was that inflation is seen as the biggest threat to the global economy and policymakers are committed to raising rates to keep prices control despite the recessionary risks.
Data in the US continues to show that inflation remained at stubbornly high levels in May. The US Commerce Department reported on Thursday that the core personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation, rose by 4.7% in May. The reading was 0.2 percentage points lower than the month before, but still around levels last seen in the 1980s.
Locally, the JSE all share fell 2.25% to 66,223.32 points, taking its losses for the month to 8.14% and 10.16% so far this year.
The top 40 was down 2.35% on the day, while industrial metals fell 4.65%, resources 3.06%, financials 3.09% and banks 3.03%.
At 6.27pm, the Dow Jones industrial average was 0.65% weaker at 30,828.78 points. European markets closed weaker, with London’s FTSE 100 falling 1.96%, Germany’s DAX down 1.69% and France’s CAC 40 1.8% lower.
The rand touched an intraday low of R16.4736/$, but by 6.09pm had pared the loss to 0.52% at R16.3291/$. It was also 0.68% weaker at R17.0868/€ and 0.98% softer at R19.8611/£. The euro was 0.24% stronger at $1.0464.
Gold was down 0.22% at $1,812.66/oz and platinum 1.64% at $900.50. Brent crude fell 4.58% to $110.32 a barrel.
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