JSE recovers from shaky start as risk-on trade regains momentum
After a lacklustre start on Thursday, the JSE picked up momentum in risk-on trade to end the day higher, with industrials and banks faring best.
Risk assets received a boost after US President Donald Trump backtracked on previous threats to bomb Syria by tweeting on Thursday that he never said when an attack would take place. "It could be very soon or not so soon at all."
The Dow was 1.3% higher at the JSE’s close after European markets rose despite their Asian counterparts ending lower.
Market speculation was that the US Federal Reserve might embark on more aggressive monetary policy tightening this year, following the release of Federal open market committee (FOMC) minutes on Wednesday. With policy makers expecting inflation to rise in the coming months, the Fed may be forced to adopt a slightly more hawkish approach on rates, said FXTM analyst Lukman Otunuga.
At the same time, Fed members expressed some concern about an escalating trade war between China and the US as it also affected other countries. "All in all, the minutes were pretty hawkish and reflected a strong sense of optimism among policy makers," Otunuga said.
The dollar showed little movement on the minutes, but equity markets reacted positively as the stance is indicative of a healthy US economy.
Gold came under pressure on the hawkish minutes, losing 1.2% to $1,337.07 an ounce by the JSE’s close. The platinum price was 0.35% lower at $928.30 and Brent crude had softened 1% to $71.24 a barrel.
Mining stocks remained lower as the rand recovered from its worst levels of the week, briefly breaking through R12 to the dollar again. Property stocks were marginally higher as the market mulled the latest developments around Resilient, following the release of the findings of its independent review on stock manipulation and insider trading.
The review exonerated the company of any wrongdoing. Investors are now awaiting two other reviews into the company — one by the JSE and another by the Financial Sector Conduct Authority.
Beleaguered Steinhoff showed signs of recovery from its record lows. The group earlier announced it had raised R3.75bn by selling 6% of its JSE-listed subsidiary Steinhoff Africa Retail (Star).
The all share closed 0.55% higher at 56,481 points and the top 40 added 0.68%. Banks rose 1.96%, financials 0.9%, industrials 0.78% and property 0.32%. The gold index shed 2.96%, the platinum index 2.73% and resources 0.39%.
Sasol firmed 0.9% to R427. Harmony slumped 7.39% to R25.20 and Impala Platinum 4.33% to R22.96.
Standard Bank rose 2.99% to R215.18 but Capitec lost 1.1% to R844.25.
Steinhoff gained 1.66% to R2.45 and Star 0.73% to R19.40.
Resilient lost 1.61% to R64.25 and Fortress B 4% to R16.08. Growthpoint gained 1.81% to R28.74.
Naspers gained 2.22% to R3,070 in choppy trade.
The top-40 Alsi futures index gained 0.53% to 50,275 points. The number of contracts traded was 13,529 from Wednesday’s 17,109.