The JSE closed weaker amid mixed global markets on Wednesday, while tech-heavy bourses took a beating as worries about potentially worsening trade tensions between the US and China weighed on big tech companies.
US President Joe Biden said he was considering the most severe trade restrictions available if companies such as ASML of the Netherlands and Japan’s Tokyo Electron continued to ship advanced semiconductor technology to China. The US government has blocked Chinese access to advanced chips and the equipment to make them, citing security concerns, and has urged its allies to follow suit, according to Bloomberg reports.
The restrictions would affect the companies’ ability to access semiconductor products that use US technology. ASML would be limited from selling its extreme ultraviolet lithography machines to China.
The tech-heavy Nasdaq was down more than 2.5% by 6pm local time, with ASML leading the losses, dropping more than 11%.
“Although Nasdaq is experiencing its worst day in months as the sell-off of most-loved technology shares, including Nvidia, continues, a closer look reveals that the situation may not be as bleak as it seems,” said FXTM senior research analyst Lukman Otunuga. “In fact, nearly as many US stocks are rising as they are falling, suggesting that there may be some underlying resilience in the market.”
The JSE all share index lost 0.83% to 80,452 points, with major indices other than industrial metals weaker. The top 40 was down 0.8%.
At 6.10pm, the Dow Jones was 0.47% firmer at 41,148 points, while the S&P 500 had fallen 1.32%. Markets were mixed in Europe.
Locally, the Reserve Bank’s monetary policy committee will conclude its meeting on Thursday, with the decision on the interest rate expected to be delivered in the afternoon. The consensus forecast is that the committee is likely to keep the repo rate steady at 8.25%.
“For now, expect rates to remain on hold. Investors will be keeping a close eye on what the governor has to say around the Reserve Bank thinking on interest rates going forward,” RMB head of forex execution Matete Thulare said.
At 6.38pm, the rand had weakened 1.02% to R18.2578/$, 1.3% to R19.9505/€ and 1.4% to R23.7429/£. The euro was 0.26% firmer at $1.0927.
In the commodities market, gold lost 0.5% to $2,456.12/oz, while platinum gained 0.35% to $999.01/oz. Brent crude was 1.52% firmer at $85.08 a barrel.
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