MARKET WRAP: JSE closes higher despite rand slump
The local currency is under pressure from dismal economic data, as well as political risk around the role of the Reserve Bank
The JSE closed higher on Wednesday, getting a boost from global markets, as speculation grows that the US Federal Reserve may soon cut interest rates to boost the US economy.
Although global sentiment was positive and the JSE pushed higher, the rand remained under some pressure amid uncertainty about the possibility of political interference in the Reserve Bank. ANC secretary-general Ace Magashule said on Tuesday that the party had resolved to include job creation in the Bank’s mandate, but finance minister Tito Mboweni has since contradicted this.
Shortly after the JSE closed, the rand had weakened 1.46% to R14.8763/$, 1.45% to R16.7446/€, and 1.61% to R18.9269/£. The euro was little changed at $1,1256.
US Federal Reserve chair Jerome Powell indicated on Tuesday that the Fed is closely watching the trade negotiations between the US and China, which have been blamed for slowing global economic growth. He added that the Fed will “act appropriately” to ensure growth continues.
At the close of the JSE, the Dow was up 0.25% to 25,394.47 points. In Europe, the FTSE 100 had fallen 0.15% and Germany’s DAX 30 0.21%, while France’s CAC 40 had gained 0.13%. Earlier, Asian markets were mixed, with the Shanghai Composite unchanged while the Hong-Kong Hang Seng gained 0.5% and Japan’s Nikkei 1.8%.
Gold was last up 0.36% to $1,330.10/oz, after reaching a three-month high in May, while platinum fell 0.89% to $812.84. Brent crude lost 1.47% to $60.46 a barrel.
The all share rose 1.01% to 57,073.4 points and the top 40 1.04%. Gold mining led gains, up 4.44%, followed by the platinum index which climbed 3.31%. Resources and industrials gained 1.53% and 1.01%, respectively.
Gold Fields jumped 6.35% to R76, its highest level since September 2016. AngloGold Ashanti gained 4.22% to R217.20 and Harmony 3.8% to R27.56.
Among platinum miners, Impala rose 4.83% to R61.85, Northam 3.26% to R58.60, and Anglo American Platinum 2.43% to R764.20.
Tongaat Hulett dropped another 4.12% to R15.81, its lowest level since December 1992, as the company’s financial position remains in the spotlight. Last week, the sugar producer said it had identified past accounting practices that required the company to restate its results for the year to end-March 2018.
RDI dropped 4.14% to R19.45.
Rand hedge, Richemont gained 3.47% to R116.65, its best level in eight months.
Massmart fell 4.2% to R61.85, its lowest in a decade.
Earlier, the SA Chamber of Commerce and Industry (Sacci) business confidence index (BCI) declined to 93 index points in May from 93.7 in April. The depreciation of the rand and the decline of the JSE all share were among the factors that led to the year-on-year fall.
The IHS Markit purchasing managers’ index for the same month fell to 49.3 index points from 50.3 in April. New orders fell at their quickest pace in six months.
Current-account figures for the first quarter of 2019 will be released on Thursday, with analysts expecting a deficit of R149bn, according to a Bloomberg consensus.