MARKET WRAP: JSE stronger as banks rise on firmer rand
Hopes that the US and China will put an end their prolonged trade war have also lifted sentiment
The JSE closed higher on Tuesday with banks leading gains as the rand strengthened more than 2% to the dollar.
Global markets were mostly higher as expectations grow that the US Federal Reserve will cut interest rates soon. Reuters reported that the US is likely to keep interest rates unchanged this month but the market is hoping for a 25-basis-point cut in July.
On the local front, the SA Reserve Bank has also signaled the possibility of a rate cut after keeping the repo rate unchanged at 6.75% at their last monetary policy committee meeting. On Tuesday, European Central Bank (ECB) president Mario Draghi hinted at possible rate cuts for the eurozone. Draghi said the ECB would have to loosen monetary policy should inflation remain subdued.
Hopes that the US and China will put an end the prolonged trade war also lifted sentiment. On Tuesday, US President Donald Trump tweeted that he and Chinese president Xi Jinping will have an “extended meeting” at the G20 summit next week.
By the close of the JSE, the Dow had gained 1.54% to 26,513.60 points. In Europe,France’s CAC 40 was up 2.28%, Germany’s DAX 30 2.18%, and the FTSE 100 1.38%.
Shortly after the JSE closed, the rand had firmed 2.14% to R14.4907/$, recovering to its best level in almost two weeks. It had also strengthened 2.23% to R16.2411/€ and 1.94% to R18.1987/£. The euro was little changed at $1,1207.
The benchmark R186 government bond was stronger, with its yield falling 11 basis points to 8.245%. Bond yields move inversely to bond prices.
Gold had gained 0.83% to $1,350.65/oz and platinum 1.06% to $802.37. Brent crude was up 2.59% to $62.55 a barrel.
The JSE all share gained 0.75% to 58,629.1 points and the top 40 0.82%. Banks and general retailers rose 2.06% and 1.81%, respectively, with banks boosted by the strengthening rand.
Nedbank climbed 3.02% to R261.12, Standard Bank 2.26% to R200.35, FirstRand 2.24% to R68.50, and Absa 1.48% to R174.53.
Gold miners dropped 4.63%, with Gold Fields slumping 5.83% to R73.45. AngloGold Ashanti fell 5.4% to R224.86 and Harmony 2.95% to R28.25.
Brait rose 2.89% to R18.15, despite the investment company earlier reporting a loss of R11.2bn for the year ended March 2019.
Alexander Forbes gained 2.12% to R5.77. The financial services group said on Tuesday that its total headline earnings per share for the year to March fell by 1% to 44c.
MultiChoice rose 2.19% to R130.80 after the pay-TV operator said its revenue grew 6% to R50.1bn for the year to end-March.
Old Mutual fell 0.32% to R21.62. On Monday, it fired its CEO Peter Moyo after he was suspended several weeks ago.
On Wednesday, Statistics SA is expected to release inflation figures for May. According to a Bloomberg consensus, analysts are expecting core consumer inflation to rise by 0.1 percentage points to 4.2% year-on-year. Headline inflation is set to remain at 4.4%.