MARKET WRAP: JSE closes slightly firmer in cautious, quiet trade

The JSE was a little firmer on Monday in fairly quiet trade as investors adopt a cautious approach amid growing geopolitical uncertainty, which continues to weigh on the world’s financial markets.

Global events continue to drive market sentiment as investors await the next development in the US-China trade war. Tension between the pair escalated earlier this month after the US blacklisted Chinese telecoms giant Huawei, dampening global risk appetite. All eyes will be on the G20 summit next month, where there is hope that the two economic superpowers will reach a deal.

Global markets were mixed on Monday with those in the US and the UK closed for holidays. Earlier, the Shanghai Composite gained 1.38% and Japan’s Nikkei 225 0.31%, while Hong Kong’s Hang Seng fell 0.24%.

By the JSE’s close, France’s CAC 40 had gained 0.17% and the DAX 30 0.36%.

The JSE all share rose 0.12% to 54,488.20 points and the top 40 0.14%. General retailers fell 1.36%, gold miners 0.92% and the platinum index 0.73%.

Telkom closed 4.09% higher at R90, after earlier reaching an intra-day high of R98.20. The jump came after it reported improved results for the year ended March, which included a 5.3% rise in operating revenue to R41.8bn.

Brait fell 5.72% to R17.65, extending last week’s losses on news that its net asset value for the year ended March could fall by about a quarter. 

Old Mutual gained 1.43% R21.30, after shares in the financial service’s company fell on Friday following the suspension of its CEO Peter Moyo. 

Among gold miners, Sibanye fell 1.91% to R11.27, Gold Fields 0.93% to R54.48 and AngloGold Ashanti 0.78% to R164.72.

The rand was slightly weaker, falling 0.16% to R14.4371 to the dollar. It fell through R14.50 to the dollar last week after the Reserve Bank’s monetary policy committee (MPC) kept rates on hold. The Bank signaled it may only cut interest rates by the end of the first quarter of 2020.

The rand was, however, 0.11% firmer at R16.1593 to the euro and 0.38% stronger at R18.2978 to the pound. The euro weakened 0.15% to $1,1193, as pro-European parties maintained their majority in the EU parliamentary elections, despite a rise in support for populist groups.

The benchmark R186 government bond was firmer, with the yield dropping 4.5 basis points to 8.35%. Bond yields move inversely to bond prices.

Gold was flat at $1,285.38 an ounce, while platinum rose 0.65% to $809.74. Brent crude gained 0.64% to $69.66 a barrel. 

Markets continue to watch how events unfold following the local elections, with the appointment of the cabinet later in the week being closely scrutinised. With President Cyril Ramaphosa having run on a ticket of growth-boosting reforms, he will need to have a team that can fulfil his promises.

On Friday, credit ratings agency S&P Global Ratings kept SA’s long-term debt at sub-investment grade. It took a softer approach, however, than its counterpart Moody’s, which recently issued stark warnings to the government to address the country’s mounting debt burden. Moody’s is the only major ratings agency with an investment-grade rating on the country’s debt.

“With S&P already rating SA’s long-term sovereign debt sub-investment grade, its slightly poorer assessment on some of the government finance metrics has not led it to change its rating or even outlook, although it does warn that further marked fiscal deterioration could cause it to lower its ratings of SA’s long-term sovereign debt,” said Investec economist Annabel Bishop.

mjoo@businesslive.co.za