JSE likely to cheer US-China trade war ceasefire
Naspers’s main asset, Tencent, was up in Hong Kong, and a rebound in oil prices lifted BHP in Sydney
The rand, Asian markets and oil cheered the announcement of a truce in the trade war between the US and China following talks at the weekend’s Group of 20 (G20) meeting in Buenos Aires.
Brent crude oil rebounded 5.6% to $62.39 a barrel and West Texas Intermediate (WTI) was up 5.9% to $53.63 a barrel on Monday morning, indicating a good day for Sasol and other oil-related shares.
In Sydney, BHP was up 3.78% to A$31.85 ahead of the JSE’s opening.
Fortunately for South African motorists, Monday’s oil rally will not translate into higher prices until at least January. On Saturday, the government committee that sets fuel prices, which take effect on the first Wednesday of every month, announced petrol prices will drop R1.84/l on December 5, taking the price of 93 octane in Gauteng to R15.01/l.
The wholesale price of diesel will drop R1.45 to R14.67/l.
After weakening to R13.93/$ on Friday night, the rand was nearly back to last week’s level, trading at R13.70/$, R15.55/€ and R17.50/£ at 6.45am.
The announcement of a ceasefire in the US-China trade war sent mainland China’s Shenzhen composite index up 3.64% and the Shanghai composite index up 2.91%.
Hong Kong’s Hang Seng index was up 2.7%, with Tencent rising 4.17% to HK$325.
The start of a new month means November’s Absa-sponsored manufacturing purchasing managers index (PMI) and new vehicle sales figures from the National Association of Automobile Manufacturers of SA (Naamsa).
The manufacturing PMI, which foreshadows Stats SA’s manufacturing output index by about two months, is expected to show a small uptick.
The PMI has shown two short-lived attempts to breach the neutral 50 point level in 2018, only to fall for three consecutive months since July.
Investec Bank economist Kamilla Kaplan forecast that new vehicle sales would show annual growth of 1.5% in November following a rise of 1.7% in October.
“According to Naamsa, aggregate new vehicle sales growth is projected to be relatively flat in 2018 as a whole, at 558,000 units versus 557,707 units in 2017.
“Slower new vehicle price inflation, higher rates of vehicle finance extended and lower interest rates earlier in the year have provided some support to aggregate sales. However, a meaningful lift in sales growth remains constrained by weak rates of private sector fixed investment and pressure on consumer disposable income.”