Johannesburg - Global markets were spooked on Friday by a steep drop in commodity prices, and share prices of major commodity companies were sharply lower on the JSE.
The resources sector was by far the biggest loser on the JSE and by mid-morning it was already 2.34% down, pushing the rest of the market lower.
The drop in commodity prices, with copper and iron ore among the biggest losers, followed a report from the United States that President Donald Trump’s promised infrastructure programme will not be implemented before the end of 2018.
Commodity prices have rallied strongly lately on expectations that Trump's promised infrastructure plan would increase demand and boost economic growth. The market discounted the possibility that the plan would be passed by Trump and Congress this year.
At mid-morningthe All-share index on the JSE was already 0.57% lower at 51 885 points, and the Top 40-index traded 0.58% softer at 44 846 points.
Resources share prices were also lower because of the strong rand, which traded close to a 52-week high at R12.96 to the dollar, after reaching R12.87 in earlier trade. Commodities are usually priced in dollars and the resources companies receive less in rands for their exports if the local unit is strong.
The strong rand also pushed the dual-listed shares in the Industrial index lower and at mid-morning it was 0.23% softer. A firm rand is however good news for financial shares, with the Financial index trading 0.57% higher by mid-morning.
According to Republican sources, the Trump administration wants to push the infrastructure plan to next year to give the Republican Congress breathing space to tackle more important issues.
The report would also appear to align with comments made recently by Treasury Secretary Steven Mnuchin. He told CNBC that strong economic growth isn't expected to be seen in US GDP figures until later in 2018, which would coincide with an infrastructure deal being passed next year.
Anglo American [JSE:AGL] and Glencore [JSE:GLN] were the biggest losers among the big commodity companies. At mid-morning Anglo was already 5.83% lower at R201.70. The company, which before Friday’s trade was 124% higher over the past year, lost almost 6% over the previous seven days.
Glencore, which gained 112% over the past year, at mid-morning was 4.22% softer at R58.85. The share is also on a downward trend and lost 3.5% over the previous 30 days.
BHP Billiton [JSE:BIL] was 2.63% softer at R216.00 and African Rainbow Minerals [JSE:ARI] gave up 3.21% to trade at R10.62. South32 [JSE:S32] was 3.10% lower at R24.10.
With oil prices also down as US stockpiles reached the highest level in seven weeks, Sasol [JSE:SOL] traded 1.04% softer at R370.12. Sasol’s share price has on a steady decline recently, shedding more than 11% over the past 30 days.
Among the dual-listed shares Naspers [JSE:NPN] lost 1.04% to R2 158.97 and Steinhoff [JSE:SNH] was 1.24% softer at R69.88. British American Tobacco [JSE:BTI] was however 1.63% higher at R817.89.
Sanlam [JSE:SLM] was the busiest share in the financial sector, with more 2.8 million shares being sold. The stock gained 0.97% to R69.45, and before Friday’s trade was 5.8% higher over the past 30 days and 9.17% stronger over the past month.
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