The Downward Trend on the JSE Continues:
South African equities closed lower yesterday following the global trend of negative trade from stock markets around the world. The JSE All Share index closed 2.73 percent in negative territory. This has summed to a 5.81 percent loss on the index in the past one month till yesterday.
There are no signs of possible recovery in the coming weeks as oil prices remain low, China’s growth prospects remain subdued and central banks around the world are unable to come up with tools that can promote growth.
Outside South Africa, Wall Street opened lower due to declining oil prices and inflation data. The Dow traded in the red by -1.94%, while the S&P 500 traded -2.10% lower, and Nasdaq traded -2.37% in the red.
Asian markets tumble to fresh 14-1/2 month lows amid oil rout. The Nikkei closed -3.71% lower, while the Hang Seng closed lower by -3.82%. Slowdown in China pushed commodities to their lowest prices since at least 1991. This has forced companies such as Glencore Plc and Anglo American Plc to shrink their operations and sell assets. These companies have seen their shares plunged more than 75 percent since the FTSE 100 hit its record on April 27. BHP Billiton Ltd., the world’s biggest mining company, has lost 60 percent in the period and cut its full-year iron ore forecast this week.
In Europe, stocks fell to a 15-month low as falling oil prices and results from companies including Zurich Insurance Group AG and Royal Dutch Shell Plc exacerbated investor concern about global growth. European indices slump on commodity stocks and banks. The DAX traded lower by -2.58% while the CAC 40 was lower by -3.18% and the FTSE 100 traded -3.09% lower. At local close Oil (Brent) traded lower by -2.57% at $28.02 while Gold traded higher by +1.12% at $1101.30. The dollar traded 0.01% stronger against the EURO at EUR/USD $1.0907. There is indication from various analysts that the bottom is yet to be reached. This means that investors should expect prices of various stocks and indices to continue to slide until the bottom is found. Investors need to be careful and analyse risk on their current portfolio and be more cautious in allocating new money to the market.