Stocks weaker as oil prices slump to multi-year lows

Global markets including the JSE slipped lower on Monday on the back of a slump in crude oil prices to multi-year lows.

With demand for the commodity increasingly waning, investors are becoming increasingly cynical that this is a sign of slowing global economic activity. Equity index losses were relatively modest in comparison to the trend that has been observed over the past couple of weeks.

In Asia, the Nikkei lost 1.15{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} while the Hang Seng shed 0.21{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}. The Shanghai Composite index managed to post gains of 0.36{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}. Mild losses were also recorded across most European equity index benchmarks before the US session opened with deeper losses.

The rand managed to gain some momentum towards the JSE close but overall, it was still trading softer against the greenback on the day. At 17.00 CAT, the rand was trading 0.04{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} weaker at R18.74/$.

On the local bourse, MTN Group [JSE:MTN] traded under considerable pressure as it lost 17.67{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R43.43, while sector peer Telkom [JSE:TKG] dropped 4.51{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R20.10.

Retailers traded mostly lower on the day as declines were recorded for Woolworths [JSE:WHL] which dropped 3.28{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R29.22, as well as Mr Price [JSE:MRP] which retreated 3.26{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R126.73.

Financials followed a similar trend as declines were recorded for Standard Bank [JSE:SBK] which lost 3.5{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R99.71, and Nedbank [JSE:NED] which fell 2.91{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R91.75. UK focused listed property firm, Intu Properties [JSE:ITU] fell 6{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R1.41, while Hammerson PLC [JSE:HMN] retreated 4.29{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to end the day at R16.27.

Fortress REIT [JSE:FFB] recorded a strong surge in today’s session as it rocketed 8.17{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R2.25. Gold miners recorded decent gains on the day led by DRD Gold [JSE:DRD] which climbed 4.25{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R16.20, while AngoGold Ashanti [JSE:ANG] managed to rise 2.15{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R421.17.

Platinum miner, Impala Platinum [JSE:IMP] added 4.36{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R112.71, while Northam Platinum [JSE:NHM] advanced 1.91{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R88.00. Index heavyweight Naspers [JSE:NPN] managed to climb to 1.43{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R2815.31, while Prosus [JSE:PRX] added 2.3{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to close at R1366.28.
 
The JSE All-Share index eventually closed 0.58{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} softer while the JSE Top-40 index shed 0.55{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}. The Financials index tumbled 1.94{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}, while the Resources and Industrials indices lost 0.39{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} and 0.33{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} respectively.

Brent crude was trading 5.24{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} lower at $26.61/barrel just after the JSE close.
At 17:00 CAT, Platinum was up 0.67{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} at $782.32/Oz, Palladium was 0.39{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} firmer at $2 174.67/Oz, while Gold had inched up 0.48{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to trade at $1 691.84/Oz.

* Musa Makoni is a trading specialist at Purple Group.