The FTSE/JSE All Share Index (ALSI) lingered around 77 150 on Thursday, near its lowest point since early May. Traders kept a watchful eye on local election results while evaluating the most recent monetary policy announcement. Partial results from the national election reveal that the ANC may fall short of securing over 50% of the vote, hinting at a potential loss of its majority for the first time since its ascent to power in 1994. Although still expected to be the largest party, the ANC may require a coalition to remain in power, necessitating negotiations with other parties to reaffirm Ramaphosa's presidency. In economic news, the South African Reserve Bank kept its key repo rate at 8.25%, marking the sixth consecutive meeting at 2009-highs, as widely expected. While the inflation forecast risks are assessed as broadly balanced, the Committee believes that high inflation expectations necessitate achieving their target sooner rather than later to re-anchor these expectations.
European stocks show a modest rebound, with both the STOXX 50 and the STOXX 600 ending higher on Thursday, climbing by 0.40% and 0.60%, respectively. This recovery followed a couple of dismal sessions earlier in the month. The bond market pause occurred following US data suggesting that two Federal Reserve (Fed) rate cuts might remain an option. Within sectors, the health sector performed notably well, with Bayer (ETR:BAYGN) registering an increase of more than 2%. Conversely, losses were led by the mining and tech sectors, with SAP dropping nearly 4% due to a revenue miss from Salesforce (NYSE:CRM). Auto Trader (LON:AUTOA), conversely, surged approximately 12% after outperforming analysts' forecasts. Economic sentiment in the Eurozone rebounded less than anticipated, while the unemployment rate surprisingly dipped.
US stocks faced downward pressure on Thursday, with the S&P 500 slipping by 0.30%, the Nasdaq by 0.20%, and the Dow Jones plummeting around 330 points. This decline was primarily driven by the tech and communication services sectors. Salesforce shares experienced a significant drop of more than 18% after missing revenue and sales growth expectations. Additionally, Kohl’s suffered a steep decline of over 25%, its most significant drop on record, following a substantial sales miss and guidance revision. Oracle (NYSE:ORCL) (-3.50%), TMO (-1.90%), and Adobe (NASDAQ:ADBE) also saw sharp declines (-3.50%).
Asian markets followed suit. The Nikkei 225 Index fell by 1.30% to close at 38 054, while the broader Topix Index dipped by 0.56% to 2 726 on Thursday. Japanese shares reached one-month lows intraday, influenced by a weak performance on Wall Street and mounting global bond yields. In China, the Shanghai Composite declined by 0.62% to close at 3 092, and the Shenzhen Component dropped by 0.32% to 9 385 on Thursday. Mainland stocks also hit one-month lows, reflecting a global market sell-off spurred by surging Treasury yields and hawkish signals from the Fed. Investors awaited China's May PMI figures to be released later today to assess the current state of the world’s second-largest economy.
In the UK, the FTSE 100 remained close to the flatline at the 8 185 mark on Thursday. The index sustained its significant downturn since hitting a record high of 8 445 in mid-May. Markets continued to evaluate the potential implications of more restrictive policies by major central banks on the UK’s corporate sector. Industrial miners traded in London experienced sharp declines, with Rio Tinto (LON:RIO), Glencore (LON:GLEN) (JO:GLNJ), and Antofagasta (LON:ANTO) falling between 2% and 1% as base metal benchmarks retreated from recent peaks.
Gold saw a slight increase to the $2 340 per ounce level on Thursday, offsetting the prior session's decline. This movement mirrored the relief seen in US Treasuries as a batch of economic data questioned the perceived resilience of the US economy, hinting at a conducive environment for Fed interest rate cuts. Meanwhile, WTI crude oil futures traded below the $78.4 per barrel level on Thursday, extending the retreat from May’s peak of $80 touched on Tuesday. Market participants assessed fresh data ahead of the OPEC+ meeting scheduled for the weekend.
