JSE still in the red

Wed, 20 Aug 2008

The JSE closed solid in the red on Tuesday, in line with world markets as commodity prices continued to fall. The bourse gave little attention to local gross domestic product data released earlier by Statistics SA.

Quarterly GDP increased by 4.9 percent in the second quarter of 2008 after an increase of 2.1 percent in the first quarter of 2008.

The JSE's all share index slumped 2.00 percent and closed at 26 270.460 points.

The platinum mining index plummeted 5.32 percent, resources retreated 1.60 percent but the gold mining index bucked the trend, adding 0.73 percent.

Banks plunged 3.82 percent, financials slumped 3.04 percent while industrials retreated 2.02 percent.

Among gold counters, Gold Fields collected 2.25 rand to 68.25 rand, Harmony edged up four cents to 57.55 rand but AngloGold Ashanti eased 1.35 rand to 202.16 rand.

Among platinum miners, Anglo Platinum plunged 5.46 percent to 831 rand while Impala Platinum tumbled 5.91 percent to 211 rand.

Resources giant, Anglo American dropped 1.65 percent to 390.65 rand while rival BHP Billiton pulled back 2.31 rand to 220.25 rand. Petrochemicals group Sasol gained 25 cents to 386.75 rand.

Among industrials, brewer SABMiller shed 1.48 rand to 164 rand while Bidvest plummeted 5.45 percent to 104 rand.

Among financial stocks, Sanlam withdrew 2.57 percent to 17.43 rand while Old Mutual slumped 4.03 percent to 13.35 rand.

Among banking stocks, Standard Bank plunged 4.12 percent to 84.49 rand, Nedbank pulled back 2.80 percent to 104 rand, FirstRand plummeted 5.09 percent to 15.29 rand while Absa retreated 2.19 percent to 107.30 rand.

Euro sharply lower

Wed, 20 Aug 2008

European stock markets closed sharply lower Tuesday, following heavy losses on Wall Street on concerns more bad news is to come in the US subprime home loan crisis.

Dealers said recent bank results and steadily gloomier US economic data had undercut any optimism on the outlook.

"The credit crisis obviously didn't end at mid-2008," said Ed Yardeni of Yardeni Research, adding: "It isn't even obvious that the worst is over."

On Monday, shares in US mortgage giants Fannie Mae and Freddie Mac — which together back more than 40 percent of all US home loans — fell badly on growing speculation the US government would have to bail them out.

Reports of more problems at the banks as they try to get a mountain of weak property assets and loans off their books added to the negative tone which saw Wall Street slump 1.54 percent that day.

News that US wholesale or factory gate inflation jumped to a 27-year high in July and US home starts collapsed to a 17-year low pushed markets down further on Tuesday.

This latest data compounded fears that the US Federal Reserve has little room to act on interest rates, dealers said.

Normally, rates would be cut to help boost a stalling economy but with growing price pressures in the pipeline, the US central bank cannot afford any action that might allow inflation to take hold.

In London, the FTSE 100 index lost 2.38 percent to 5320.40 points. In Paris, the Cac 40 tumbled 2.61 percent to 4332.79 points and in Frankfurt the Dax shed 2.34 percent to 6282.43 points.

The Euro Stoxx 50 index of leading Eurozone companies lost 2.56 percent.

The euro was at 1.4765 dollars.

In Asia, markets were also down sharply as investors followed on from Wall Street's losses on Monday.

The Tokyo bourse tumbled 2.28 percent to a one-month low as the Bank of Japan painted a gloomy picture of Asia's largest economy, saying growth would remain sluggish as it held interest rates steady at 0.5 percent.

Hong Kong fell 2.1 percent and Sydney shed 2.38 percent.

In New York on Tuesday, dealers said news that US wholesale prices in July spiked 9.8 percent, the sharpest rise in 27 years, coupled with a fall in housing starts of 11 percent to a 17-year low spooked the market badly.

The Dow Jones Industrial Average was down 1.38 percent at around 4.15pm GMT.

Yardeni said the latest concerns over Fannie Mae and Freddie Mac together with "the widening credit quality spreads in the money and bond markets is certainly unsettling. Banks will have to refinance lots of their maturing bonds during the second half of this year. They will have to pay higher yields and that will force them to raise their lending rates."

Analyst John Wilson at Morgan Keegan said the latest troubles represent a new test for an equity market that had been on a recovery track.

"The market has handled bad news well for the past few weeks which could indicate that investors are beginning to look out into the future.

"For now, though, traders are back to the present and worried about the here and now. We could get a test of the recent lows over the next few weeks."

In London, banks and home builders took the brunt of the losses as investors abandoned any hope of an early recovery and sold down the stocks.

Barclays, one of the British banks most exposed to the US markets, lost 6.42 percent to 324.25 pence, HBOS shed 7.35 percent to 277.50 pence, Royal Bank of Scotland was off 5.91 percent to 215 pence and Lloyds TSB was down 5.80 percent at 288.25 pence.

Among home builders the losses were severe, with Taylor Wimpey falling 9.63 percent to 42.25 pence and Persimmon off 8.13 percent to 305 pence.

Among the few gainers were energy stocks, supported by their defensive qualities in times of stress, with National Grid up 0.28 percent to 710 pence.

"The US indicators today carry a strong flavour of stagflation," said Dimitry Fleming of ING bank, referring to the dreading combination of rising prices and minimal growth which scarred the 1970s.

In Paris, BNP Paribas lost 3.97 percent to 58.09 euros and Societe Generale was down 4.19 percent at 61.71 euros.

In Frankfurt, Postbank tumbled 6.45 percent to 40.01 euros while Deutsche Bank shed 4.59 percent to 57.26 euros.

Elsewhere in Europe, the Bel-20 index in Brussels fell 2.34 percent, Spain's Ibex-35 dropped 2.93 percent, Italy's MIB 30 was down 2.00 percent, the AEX 25 in Amsterdam lost 2.86 percent and Switzerland's SMI 20 shed 1.61 percent.