JSE closes higher as banks and retailers surge on a stronger rand
The JSE all share closed firmer on Thursday, as the stronger local currency bolstered banks and retailers, while platinum stocks rose on Sibanye-Stillwater’s takeover deal for Lonmin.
General retailers and banking stocks rocketed after the rand reached its best level to the dollar in two months. Global sentiment turned dovish after the Bank of England kept rates unchanged, and the European Central Bank (ECB) re-affirmed its loose monetary stance, which would continue until at least September 2018.
The rand was also supported by views that Deputy President Cyril Ramaphosa had all but wrapped up the ANC elective conference. He leads in the branch nomination stakes, with rival Nkosazana Dlamini-Zuma’s supporters still stuck in a number of court cases, which may influence the outcome in Ramaphosa’s favour.
Analysts emphasised the rand would be key to the fortunes of the JSE in the coming week. The all share has been struggling this week, closing lower on Monday, Tuesday and Wednesday.
A firmer rand is likely to support locally focused stocks while a weaker rand traditionally benefits rand hedges. The rand has outperformed in the days leading up to the start of the ANC conference, on Saturday, mainly on dollar weakness. It firmed further to R13.38 to the dollar in intra-day trade on Thursday, based on favourable current-account deficit data.
"Although some of the rand gains appear to be reflecting that the markets may be anticipating a more market-friendly outcome at the ANC conference, that is not to say that this has been completely priced in," said Novare Actuaries analyst Tumisho Grater, referring to a win by Ramaphosa.
Grater said it was still possible to see the rand gain further, should Ramaphosa win. "Of course, the risk is that if this scenario does not play out, the rand will weaken."
The Bank of England kept rates unchanged on Thursday and the ECB elected to keep its stated asset-purchasing programme in place until September next year, albeit at a lower level. European markets initially trended lower, as ECB president Mario Draghi expressed concern about low inflation, thereby dampening growth prospects in 2018.
The Dow was up 0.25% soon after the JSE’s close, while the FTSE 100 had lost 0.20% and the DAX 30 0.10%.
The all share closed 0.87% higher at 57,845.60 points and the blue-chip top 40 added 0.68%. Banks rose 4.84%, general retailers 4.27%, platinums 3.86%, financials 2.59%, and food and drug retailers 2.1%. The gold index shed 1.53%.
Anglo American gained 1.08% to R253.11.
Sibanye-Stillwater shed 7.08% to R14.97, after offering to buy Lonmin in a £285m deal; Lonmin rose 7.2% to R13.40.
Northam Platinum was up 7.4% to R47.17 and Impala Platinum 5% to R30.45.
Standard Bank added 4.79% to R178.35 after it was announced that former Treasury director-general Lungisa Fuzile has been appointed head of the bank’s South African operations.
FirstRand climbed 4.67% to R56.98 and Barclays Africa 5.5% to R160.05.
Steinhoff International was down 8.98% to R8.92, but Steinhoff Africa Retail gained 6.35% to R16.75.
Mr Price jumped 6.34% to R219.62, Massmart 5.66% to R125.01, and Shoprite 3.48% to R223.51.
PPC dropped 8.07% to R5.81, after ending merger talks with LafargeHolcim, which was PPC’s last remaining suitor following withdrawals by CRH‚ Fairfax and Dangote.
Investment holding company PSG Group recovered 4.83% to R250, after losing substantial ground in the wake of the Steinhoff debacle.
Technology group EOH improved 16.62% to R64.48.
Naspers ended the day 1.84% lower at R3,415.49.