MARKET WRAP: JSE rallies to record high on banks and retailers
The JSE closed firmer on Tuesday as general retailers, banks and financials gained on positive sentiment, despite economic growth expected to be subdued over the short term.
Volumes amounted to R21bn at the close, as risk-on sentiment dominated after the Dow hit a renewed record earlier in the week. Asian markets also recorded strong gains on the day.
The International Monetary Fund (IMF) expects economic growth in SA for 2018 and 2019 to remain below 1%, putting it at 0.9% for both years. Increased political uncertainty is set to weigh on confidence and investment.
However, a report by Goldman Sachs saying SA could be the emerging-market story of 2018 has buoyed sentiment, despite the rand weakening marginally on the day due to a lack of developments on the political front.
Rand hedges were generally higher, driven by Naspers, but global miners were lower after a comeback in the rand at the close and amid flat commodity prices.
The all share closed 0.68% higher at 61,475.40 and the blue-chip top 40 gained 0.66%. Banks rose 2.49%, general retailers 2.47%, food and drug retailers 2.14%, financials 1.78%, industrials 1.16%, and property 1.05%. Resources dropped 1.75%, platinum 1.33%, and gold 0.29%.
Diversified miner Anglo American dropped 3.22% to R291.22 and Glencore 3.16% to R66.10. Kumba Iron Ore fell 4.38% to R358, Assore 4.87% to R371.96, and Exxaro 5.2% to R148.99.
Rand hedge Anheuser-Busch InBev fell 1.19% to R1,380 while Richemont gained 0.98% to R112.95.
After weakening to R12.16 to the dollar from R12.0545, the rand regained some momentum toward the close, firming to R12.1097 after the euro recorded some ground against the greenback ahead of the European Central Bank (ECB) meeting on Thursday.
The ECB is expected to hint at a more hawkish stance on interest rates at the meeting.
Earlier, a deal within the US Senate that ended, at least temporarily, a three-day government shutdown, lifted the dollar; this capped further gains in the rand after it flirted with breaking through R12 to the dollar on Monday.
Local bonds were steady with the R186 unchanged at 8.38%, as the market followed the rand on the day.
The US 10-year treasury was last seen at 2.6172% from 2.6495%.
The top-40 Alsi futures index gained 0.63% to 54‚938 points. The number of contracts traded was 14‚468 from Monday’s 13‚889.