MARKET WRAP: JSE gains as trade truce optimism lingers

The JSE closed in positive territory on Tuesday but investors remain cautious amid mixed messages from the US and China on the ongoing trade war. 

The two economic superpowers have said they are optimistic about the negotiation process with China’s vice-premier Liu He saying on Monday that he hopes for “calm” negotiations and for the trade war to not escalate any further, Reuters reported.

The Chinese foreign ministry, however, said it was not aware of any telephonic talks between the US and Chinese negotiators after US President Donald Trump said on Monday that officials from the two countries had communicated via phone.

The trade spat escalated last week after the China imposed new tariffs of between 5% to 10% on $75bn worth of US imports. In retaliation, the US threatened to impose a 25% to 30% tariff on $250bn worth of Chinese goods. 

“The number of twists and turns in the trade dispute, particularly more recently, have made the markets incredibly challenging to trade. Traders are so sensitive to US–China trade talks amid concerns over a slowing global economy, that a headline or tweet can quickly cause a significant move,” said London Capital Group head of research Jasper Lawler. 

Earlier, the Shanghai Composite rose 1.35% and Japan’s Nikkei 225 0.96%, while Hong Kong’s Hang Seng was flat. Soon after the JSE closed, the Dow was flat at 25,878.62 points. In Europe, the FTSE 100 was little changed, while France’s CAC 40 had added 0.67% and Germany’s DAX 30 0.62%.

The rand had weakened 0.31% to R15.3318/$, 0.22% to R17.0086/€, and 0.85% to R18.8387/£. The euro was flat at $1.1094. Gold was up 1.02% to $1,542.49/oz and platinum 1.18% to $865.09. Brent crude added 0.39% to $58.57 a barrel. 

“The trade war is doing wonders for gold, which, on Friday and Monday, soared to new highs for the year as traders sought the comfort of a traditional safe haven,” senior market analyst at Oanda Craig Erlam said.

The benchmark R186 government bond was stronger, with the yield falling 1.5 basis points or 0.015 percentage points to 8.235%. Bond prices move inversely to bond yields.

The JSE all share gained 0.16% to 53,895.80 points and the top 40 0.22%. Banks lost 1.16%, while industrials rose 0.26%, resources 0.65% and the platinum index 0.69%.

Absa fell 2.14% to R147.77, Nedbank 2.11% to R216.75, and Standard Bank 1% to R168.68.

Imperial Logistics jumped 8.9% to R51.86. The company said on Tuesday that its continuing headline earnings per share fell by 7% to 542c but its revenue increased by 6% to R49.7bn in the year to end-June.

DRD Gold rose 0.14% to R7.07. The company said earlier that it expects headline earnings per share to increase to between 10.73c and 11.07c in the full year to end-June from 1.7c in the previous period.

Raven Property Group said on Tuesday that its operating profit increased to £77.2m from £11.7m in the six months to end-June. Its share price was unchanged at R8.10.

mjoo@businesslive.co.za