MARKET WRAP: JSE caps wild week with a win

The JSE climbed for a second-consecutive day on Thursday, capping a volatile week with a win as jitters over the US-China trade war subsided a little.

Concern that the trade war was entering a new phase threw markets into turmoil on Monday, with the all share slipping 2.31% as investors fled risk assets.

Markets, however, breathed a sigh of relief after the yuan was steadied to below 7/$ by Chinese authorities on Wednesday and Thursday. Thursday also saw better-than-expected Chinese export data, which helped lift sentiment even further.

The all share gained 0.56% to 55,535.2 points and the top 40 rose 0.74%. Industrials added 0.94% and resources 1.04%. Gold miners slipped 4.14%, but still added 8.77% during the week.

The all share fell 1.31% during the week.

The rand was flat at R15.0524/$, having fallen to an 11-month low against the greenback this week on US-China trade-war jitters, as well as growing concern over Eskom’s debt burden. 

The benchmark 10-year R186 government bond weakened, with its yield rising 1.5 basis points to 8.38%. Bond yields move inversely to bond prices.

The recent stream of negative political and economic news has put an 80 basis-points, or 0.8%, premium on SA’s 10-year bond, said Albert Botha, head of fixed-income portfolio management at Ashburton Investments. “The additional risk premium is now equal to what we saw in the days running up to the ANC elective conference in December 2017. Investors, and particularly foreign investors, are wary.”

Although the global monetary policy environment remained accommodative, local downgrade concerns and a need to wait for the October medium-term budget policy statement would mean the Reserve Bank is likely to remain cautious, said Jeffrey Schultz, senior economist at BNP Paribas.

As such the Bank would probably only cut rates again in November, he said.

Shortly after the JSE closed the Dow was 0.71% up at 26,189,58 points, while in Europe, the FTSE 100 had added 0.88%, the CAC 40 1.69% and the DAX 30 1.2%.

Gold was down 0.53% to $1,493.85/oz and platinum 0.48% to $860.07. Brent crude was flat at $57.40 a barrel.

Earlier local data was downbeat, with mining production falling 4.4% year on year in June, much worse than the 2.1% fall expected by the market.

Manufacturing output in the same month slumped 3.2% year on year, much worse than the 1.6% growth expected.

MTN slipped 2.87% to R109.47, after the company said it had to write down R393m for network services provided to Cell C in the six months ended June. 

AngloGold Ashanti slumped 5.48% to R302.48, despite the miner reporting on Thursday that its second-quarter production rose 7% from the first.

Standard Bank inched up 0.13% to R171.21, after it upped its interim dividend 6% to 454c for the period to end-June.

Naspers added 2.37% to R3,449.99.

Discovery slumped 8.5% to R115.47, with the government saying on Thursday that it was pressing ahead with its plans for a National Health Insurance (NHI) fund.

gernetzkyk@businesslive.co.za