MARKET WRAP: Sasol leads JSE higher despite rand’s slump
Banks and retailers fare worst, as equities react to a softer rand after a bailout of Eskom, while a rising oil price boosts Sasol and some miners
A rising oil price and weaker rand put pressure on the JSE’s interest rate-sensitive stocks on Tuesday, but gains by rand hedges and Sasol were sufficient to offset losses.
The rand softened over the weekend, under pressure after it emerged on Friday the state has been forced to bail out Eskom to the tune of R5bn.
As the JSE closed, the rand had slumped 1% to R14.3119/$, having now lost almost 2% since its close on Thursday.
Intensifying US sanctions on Iran have also pushed the price of oil to a 2019 high, adding to pressure on interest rate-sensitive stocks. This, however, benefited Sasol, which surged 4.21% to a five-month high of R487.49. Some diversified miners also gained, while Naspers added 1.48% to R3,674.
The all share firmed 0.54% to 59,544.8 points and the top 40 0.59%. Gold miners lost 2.4% and banks 1.24%, while the resources index added 1.37% and industrials 0.74%.
Rand hedge AB InBev gained 2.33% to R1,290, British American Tobacco 1.6% to R570, and Richemont 1% to R106.79.
Atlantic Leaf added 0.75% to R17.40. It earlier reported that assets under management for the year to end-February grew 1.1% from the prior comparative period. It upped its distribution per share 2.2% to 9.3p.
Capitec lost 1.75% to R1,396.56.
Spar fell 2.3% to R198.
As the JSE closed, gold had fallen 0.43% to $1,269.39/oz and platinum 1.26% to $887.68. Brent crude was up 0.27% to $74.30 a barrel.
At the same time, the Dow was up 0.37% to 26,609.42 points, while in Europe the FTSE 100 had risen 0.86%, the CAC 40 0.21%, while the DAX 30 was flat.
International focus is on US corporate earnings season, with dozens of large companies across a range of sectors set to report this week.
Market players seem to be adopting a cautious approach ahead of the next wave of corporate earnings and this continues to be reflected across global stocks, said FXTM research analyst Lukman Otunuga. Overall, the releases will give an indication of the health of the global economy, and disappointing earnings reports could prompt investors to move into safe-haven assets.
There are few local economic releases this week, but on Thursday, producer inflation numbers — as measured by the annual change in the producer price index (PPI) — are due.
The University of Stellenbosch’s Bureau for Economic Research (BER) consumer confidence index for March is due on Wednesday. Consumer confidence may have deteriorated in the first quarter in view of the extensive load-shedding in February and March, as well as fuel price increases and the announcement of a substantial electricity tariff increase for 2019, Investec economist Kamilla Kaplan said.
Relatively subdued consumer confidence will continue to manifest in dampened activity in the consumptive sectors of the economy.