At 15:11 GMT the rand was 1.29% weaker at R12 per dollar, having earlier tripped to a session-low of R12.02 as trading in New York resumed and traders reactivated bets of at least four interest rate hikes.

JOHANNESBURG - South African markets weakened on Friday as investors dropped riskier assets for safer investments on the back of the threat of a global trade war sparked by United States (US) President Donald Trump’s tariff plan on steel.

Trump’s plan sparked fears of an imminent trade war and worries about its potentially negative impact on the world’s largest economy, dragging emerging market stocks and currencies lower.

At 15:11 GMT the rand was 1.29% weaker at R12 per dollar, having earlier tripped to a session-low of R12.02 as trading in New York resumed and traders reactivated bets of at least four interest rate hikes by the Federal Reserve in 2018.

The rand, amongst the best performing emerging market currencies in the first two months of 2018 as hopes of an economic recovery under new President Cyril Ramaphosa buoyed investor confidence, has lost about 3.6% this week.

“It is a trade war that the global economy has feared since Trump became President,” said ForexTime Global Head of Currency Strategy and Market Research Jameel Ahmad.

“This could mean weaker stocks and shares, whereas investors might be encouraged to look at safe haven instruments.”

Bonds were also softer, with the yield on the benchmark paper due in 2026 up 4.5 basis point to 8.18%.

In the equities market, the Johannesburg All-share index fell 0.52% to 57,621 points, while the Top-40 index weakened 0.59% to 50,708 points, dragged down by market-heavyweight Naspers, which fell 1.37% to R3,251.58.

Naspers owns a third of fast-growing China’s Tencent Holdings and tends to mirror the movements of the tech giant. Tencent was weaker as shares in China fell across the board on the spectre of a global trade war.

Steelmaker ArcelorMittal tumbled to a 16-1/2-year low, down 9% to R2.60. The stock recovered to close 0.70% lower at R2.85.