JSE gains as banks rally on firmer rand and global risk-on sentiment
Emerging-market currencies are firm on the view that US-China tariff war will not affect the global economy as negatively as previously thought
The JSE opened firmer on Friday as global risk-on sentiment rebounded on renewed weakness in the dollar.
Risk-on trade was supported by a sharp rise in US markets, with the Dow Jones closing 0.95% higher on Thursday. Asian markets rose in response, with the Nikkei 225 gaining 0.82% and the Hang Seng 1.63% on Friday.
The yield on the benchmark 10-year US treasury has been rising steadily since the beginning of September, as investors have sold out and prices have fallen in what was previously regarded as a safe-haven investment.
But the dollar has not benefited on the expectation that the US Federal Reserve will hike interest rates next week in a somewhat weaker global environment, which could affect US growth going forward.
Emerging-market currencies gained, with the rand firming to R14.2160 to the dollar, the best level in a month. The euro firmed to $1.18 for the first time since June.
It is necessary to remain cautious about further prospects of the growth in the marketFxPro analysts
The weaker dollar supported commodity prices and oil. Brent crude rose 0.41% to $78.91 a barrel.
FxPro analysts said the main reason behind the current rally in emerging-market currencies was the less stringent than expected tariffs on imports from the US and China.
However, they cautioned there was still no meaningful data that reflected the real effect on the economy. “It is necessary to remain cautious about further prospects of the growth in the market,” they said.
The rand was also supported by the Reserve Bank’s forward view on interest rates after the Bank’s monetary policy committee kept rates on hold on Thursday.
While taking a hawkish forward view, the committee mentioned that domestic growth had weakened further, strengthening a view in the market that it is unlikely that rates will rise in the next few months.
At 9.46am the all share was 0.59% higher at 56,879.30 points and the top 40 rose 0.68%. Banks rose 1.16%, platinums 1%, resources 0.79%, financials 0.56% and industrials 0.54%. The gold index slipped 0.66%, and food and drug retailers 0.41%.
Anglo American rebounded 2.2% to R329.41.
Sibanye-Stillwater lost 3.3% to R9.09.
Lonmin was 4.14% lower at R8.11.
Nedbank rose 1.45% to R263.78, Standard Bank 1.24% to R181.25 and Absa 1.15% to R152.11.
Clicks slipped 1.58% to R178.63. The group announced on Friday morning that Clicks Group CEO David Kneale would retire after 13 years at the helm of the retail and healthcare group.
Growthpoint recovered 0.91% to R23.20.
MTN added 0.27% to R78.38.
Naspers rose 1.175 to R3,215.