JSE slips, rand holds firm below R16/$ as global risk appetite sours

South African equities were under pressure on Tuesday, tracking a broader pullback in global markets, even as the rand held onto recent gains against the dollar.

The FTSE/JSE All Share Index was down 0.74% at around 116,117 points, while the blue-chip Top 40 fell 0.81% to roughly 108,717 points. Precious metals miners led the losses, with Gold Fields down 2.39% and AngloGold Ashanti off 1.86%, despite bullion prices holding firm. Anglo American Platinum shed 1.5%, while the major banks were also weaker, with Standard Bank down 1.25%, FirstRand 1.1% lower and Capitec off around 1%. Naspers was roughly flat, while MTN and Vodacom posted only modest losses.

The rand traded at around R15.99 to the dollar, little changed on the day but still hovering near its strongest level since the Middle East crisis flared up in late February. The currency has firmed more than 1% over the past month and is up close to 9% over the past year, helped by softer US dollar sentiment and firmer prices for gold and platinum group metals.

Renewed tension in the Middle East has kept oil prices elevated, however, with Brent crude trading near $99 a barrel and adding to South Africa's inflation risks after fuel prices were sharply adjusted higher at the start of the month.

Speculation is building that the South African Reserve Bank could raise interest rates at its next meeting on 23 September to defend its inflation target, after holding the repo rate steady in both April and July. Local headline inflation eased to 4.3% in July from 5% in June, but the fuel price increases are expected to add renewed pressure when August's figures are released.

Global markets were broadly weaker overnight, with US stocks retreating from recent highs. The Dow Jones Industrial Average fell close to 1%, while the S&P 500 and Nasdaq also ended in the red as investors weighed a stronger-than-expected US jobs report and rising bets on a Federal Reserve rate hike this month.

Big tech names were hit particularly hard, with Tesla down nearly 6% and Apple and Microsoft both down more than 2%. Asian markets extended the losses into Tuesday's session, with Japan's Nikkei down more than 2% and Australia's ASX 200 falling 2%, though Chinese markets were a touch firmer.

Gold was trading at around $4,390 an ounce, silver near $65.80, and copper just under $6.70 a pound. South Africa's benchmark 10-year bond yield was little changed at around 8.75%.

The moves come a day after Statistics South Africa reported that the domestic economy contracted 0.2% in the second quarter, reversing the previous quarter's growth, with mining and manufacturing the biggest drags on activity.