South African stocks slipped to a near two-month low on Friday as a wave of risk aversion swept across financial markets on resurgent US-China trade tensions, while the rand also weakened.
Both major stock indexes weakened more than 2% at market open after US President Donald Trump hit China with a 10% tariff on the remaining $300 billion of Chinese imports on Thursday, a day after negotiators from both countries concluded a meeting in Shanghai without significant signs of progress.
“The negative mood across markets suggests that investors are jittery over sizzling trade tensions between the world’s two largest economies sabotaging the already fragile global growth outlook,” Lukman Otunuga, a senior research analyst at FXTM said in a note.
“With China already pledging countermeasures if the US implements the additional tariffs, things could get really messy – something that will ultimately cripple risk sentiment even further.”
At 1058 GMT, the Johannesburg All-Share index fell 1.8% to 56 195 points, while the Top-40 index shed 2.11% to 50 248 points, both weakening to levels last seen on June 4.
Bucking the trend, the gold index strengthened 3.1% to 2 150 points as investors sought safe-haven assets. Harmony Gold rose 4.99% to R38.51, AngloGold Ashanti gained 3.92% to R273.45, while Sibanye-Stillwater climbed 3.41% to R18.82.
“On the gold/rand side these are the best levels that the market has ever seen. The gold reaction only confirms the risk-off environment that is in the market at the moment,” Andre Botha, senior dealer at TreasuryONE, said in a note.
On the forex market, at 1058 GMT the rand weakened 0.17% against the dollar to 14.68 from its overnight close of 14.66 per dollar.
In early trade it had firmed to 14.57 as the dollar weakened against most currencies.
Botha said: “The rand is the weakest performing emerging market currency as it is being used as a proxy due to the ease of getting in and out of the market.”
Bonds were slightly firmer, with the yield on the benchmark 10-year government issue down 2 basis points to 8.355%.