JSE slips after data on US weakening

The JSE closed weaker amid mixed global markets on Wednesday as investors assessed two publications in the US that pointed to further weakness in the world’s biggest economy.

US payroll processing firm ADP reported that private sector hiring slowed in March, with company payrolls rising by 145,000 for the month. That was lower than the consensus estimate of 210,000, signalling that employers are cutting back on hiring.

Also, the Institute for Supply Management’s services activity index fell to 51.2 points, lower than the consensus estimate of 54.4, suggesting companies and consumers are becoming more cautious, Bloomberg reported.

Paired with the latest ISM factory survey showing a further deterioration, the services data may heighten concerns about the economic outlook as credit conditions tighten and rates remain high, Bloomberg added.

The data came after Tuesday’s job openings report, which suggested the Federal Reserve’s efforts to cool the labour market might be having an effect. However, some investors take the softer data as a potential sign that US economic growth is heading for a sharp slowdown or even recession.

“There’s been a lot to take on board over the last few days and it’s been a real mix of good and bad news, ” said Oanda senior market analyst Craig Erlam. “The JOLTS [Job Openings and Labor Turnover Survey] data yesterday and the private sector payrolls could be the first signs of weakness in the US labour market and that is huge.

“Without it, the Federal Reserve will find it very hard to make the argument that it is pausing the tightening cycle. Now it needs to be backed up and the jobs report on Friday could start that process,” Erlam added.

The JSE all share slid 1.04% to close at 76,656.42 points and the top 40 was down 1.07%.

Banks declined 1.53%, industrial metals 1.46%, financials 1.28%, industrials 1.21%, and retailers 1.09%.

At 6.57pm, the Dow Jones industrial average was little changed at 33,384.60 points. In Europe, London’s FTSE 100 gained 0.37%, but Germany’s DAX and Frances CAC 40 were down 0.53% and 0.39%, respectively.

The rand weakened in line with emerging-market currencies, touching an intraday low of R18.0298/$. At 6.10pm, it had softened 0.6% to R18.0242/$, 0.35% to R19.6704/€ and 0.45% to R22.4684/£. The euro was 0.38% weaker at $1.0914.

Gold gained 0.15% to $2,022.83/oz, but platinum fell 1.65% to $1,000.21/oz. Brent crude was 0.45% weaker at $84.82 a barrel.