MARKET WRAP: JSE positive on trade developments
The JSE rallied on Tuesday on hopes of a resolution between the US and China, which could cool tension between the two over trade
The JSE rose further on Tuesday on hopes that tension over trade between the US and China would cool as negotiators were due to meet this week in Beijing.
The all share gained 1.03% to 53,960.5 points and the top 40 1.23%. Banks gained 1.91%, industrials 1.27% and food and drug retailers 2.34%. Property was down 0.99%.
This comes as high-level trade negotiations are taking place this week, with US trade representative Robert Lighthizer and treasury secretary Steven Mnuchin scheduled to meet China’s vice premier in Beijing. Investors are hopeful that a deal will be reached before planned tariff increases kick in next month.
Investor sentiment was buoyed on Monday when US legislators announced a tentative agreement to avoid another government shutdown. The deal would provide $1.38bn of funding for 88.5kms of modern physical barriers along the border with Mexico but the amount is far less than Trump had demanded. The deal still faces White House approval.
Locally, Eskom moved to stage three load-shedding on Tuesday, while data showed that unemployment had dropped slightly in the fourth quarter and that manufacturing would contribute positively to the 2018 GDP growth figure.
Further data this week will provide a clearer indication of how the economy performed in 2018, with mining production, wholesale and motor trade statistics for December due on Thursday.
Technology company EOH’s shares tumbled on Tuesday after Microsoft served the company with a termination notice on a contract that allows it to resell the software giant’s licences. EOH’s share price plummeted 25.87% to R19.80, after reaching its lowest since March 2011 earlier in the day.
Lewis fell 5.16% to R32.15 and Nampak 2.92% to R12.95.
Spar gained 5.03% to R168.44 after the retailer reported an 8.2% increase in 17-week sales on Tuesday. Group sales for the 17 weeks ended January 26, rose to R36.53bn from R33.78bn in the same period the year before. This is despite many South African retailers having recently come under pressure due to elevated household debt, higher fuel prices and a VAT hike, all of which have put pressure on consumers’ disposable income.
Astral Foods was up 7.36% to R168.44.
Pick n Pay gained 4.09% to R67.50 after it announced that the Public Investment Corporation (PIC) had acquired further shares in the company.
Shortly after the JSE closed the Dow was up 0.97% to 25,295.53 points, while in Europe, the FTSE 100 had added 0.06%, the CAC 40 1.08% and the DAX 30 1.11%.
At the same time, gold was up 0.14% at $1,309.95/oz while platinum was down 0.29% to $785.18. Brent crude had gained 2.68% to $63.16 a barrel.
At 5.40pm the rand was up 0.23% to R13.7727/$, while being little changed against the pound and the euro. The benchmark R186 government bond was bid at 8.8% from Monday’s 8.77%.