MARKET WRAP: JSE and rand firm on Powell testimony and Kganyago news

The JSE closed higher on Wednesday as US markets cheered Federal Reserve chair Jerome Powell’s indication that the US will likely loosen monetary policy soon.

In his testimony before the US Congress earlier, Powell noted “cross-currents”, which included the US-China trade war. “Based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the US economic outlook. Inflation pressures remain muted,” he said.

Investors have already priced in a 100% chance of a rate cut at the Fed’s next meeting in July, despite positive US jobs data reducing the expectation of a cut of 50 basis points. Powell said the Fed would consider a broad range of factors, including upcoming labour, retail and quarterly GDP figures ahead of announcing its decision at the end of the month.

Shortly before the JSE closed, the Reserve Bank announced the re-appointment of its governor Lesetja Kganyago for another five-year term. His current term is due to end on November 8. The Bank also appointed monetary policy committee members Nomfundo (Fundi) Tshazibana and Rashad Cassim as deputy governors. 

Shortly after the JSE closed, the rand had strengthened 0.76% to R14.0735/$, 0.45% to R17.5929/£ and 0.43% to R15.8259/€. The euro had gained 0.34% to $1,1245. The rand reached a best intra-day level of R14.0313./$

The benchmark R186 government bond was weaker, with its yield rising three basis points to 8.12%. Bond prices move inversely to bond yields.

Gold gained 0.66% to $1,406.46/oz as Powell’s dovish tone lifted safe-haven trade, with platinum adding 1.74% to $826. Brent crude climbed 2.46% to $66.11 a barrel.

Following Powell’s testimony, the S&P 500 reached a record intra-day high of 3,002 points. Shortly after the JSE closed, the Dow had gained 0.26% to 26,852.30 points. In Europe, the FTSE 100 and France’s CAC 40 were flat, while Germany’s DAX 30 had fallen 0.46%.

Earlier, in Asia, the Shanghai Composite fell 0.44% and Japan’s Nikkei 225 0.15% while Hong Kong’s Hang Seng gained 0.31%.

The JSE all share gained 1.11% to 57,597.90 points and the top 40 1.15%. Gold miners rose 3.11% and banks 1.28%.

Gold Fields leapt 5.06% to R77.05, Harmony 3.77% to R33.82, Sibanye-Stillwater 3.13% to R16.81, and AngloGold Ashanti 1.93% to R255.80.

Among banks, Absa gained 1.61% to R168.81, Standard Bank 1.34% to R189.25, Nedbank 1.32% to R244.25, and FirstRand 1.25% to R65.51.

ArcelorMittal SA slumped 15.9% to R2.91, its biggest one-day fall in more than three and a half years after the steel maker said on Wednesday that it would soon start a consultation process with 2,000 employees. The company said it expects a headline loss of at least 569m for the six months to end-June.

Naspers gained 2.09% to R3,471.10. Its subsidiary — online fashion retailer Superbalist — said it expects an annual revenue of more than R1bn from its private-label, or in-house products, within the next three years.

Emira fell 2.88% to R13.49. The property company said on Wednesday that it plans to acquire SA Corporate Real Estate.  

Statistics SA is scheduled to release manufacturing and mining production figures for May. Analysts are expecting a 1.3% year-on-year rise for manufacturing, but a contraction of 2.4% for mining, according to the Bloomberg consensus.

mjoo@businesslive.co.za