MARKET WRAP: JSE closes at one-month high on stimulus hopes
Business confidence slumps with the BER and Sacci readings at 20- and 34-year lows, respectively
The JSE closed on the front foot on Wednesday, tracking most global markets as focus shifts to the European Central Bank (ECB) monetary policy decision on Thursday.
The ECB meeting comes just a week before the US Federal Reserve’s decision on interest rates, as expectations mount that major central banks are set to loosen monetary policy amid fears of a global economic slowdown.
“The ECB president is to be replaced in November by former International Monetary Fund (IMF) head Christine Lagarde and while [Mario Draghi] may have, at one time, hoped his handover will coincide with a return to interest-rate hikes, the opposite has turned out to be true,” Oanda senior market analyst Craig Erlam said.
Global sentiment was also lifted on news that China has exempted 16 US products from additional retaliatory tariffs — this comes as the two economic superpowers prepare to meet in mid-September before high-level negotiations in October.
Shortly after the JSE closed, the Dow was up 0.24% to 26,977.19 points. In Europe, the FTSE 100 added 0.91%, France’s CAC 40 0.44%, and Germany’s DAX 30 0.74%.
Locally, the the Bureau for Economic Research’s business confidence index (BCI) dropped to 21 points in the third quarter from 28 in the previous one, its lowest level in 20 years. The SA Chamber of Commerce and Industry BCI fell to 89.1 points in August, from 92 in the previous month, its lowest level in 34 years, data released on Wednesday showed.
“This decade, SA has lacked meaningful growth-enhancing economic reforms that result in substantial, and sustained turnaround in economic activity, confidence and investor sentiment. Instead politics is perceived as continuing to hamstring the progress of meaningful reform,” Investec economist Annabel Bishop said in a note.
At 5.18pm, the rand had weakened 0.68% to R14.7428, 0.24% to R16.209/€, and 0.47% to R18.1808/£. The euro was 0.43% lower at $1.0995.
Gold was up 0.66% to $1,495.16/oz and platinum 0.76% to $939.27. Brent crude had relinquished 2.77% to $61.06 a barrel.
The JSE all share gained 1.64% to 56,243.80 points and the top 40 1.77%. Industrials rose 2.31% and resources 1.52%.
Naspers slumped 30.03% to R2,465. The JSE heavyweight listed its internet businesses in Amsterdam on Wednesday under its subsidiary, Prosus.
Famous Brands fell 0.14% to R77.80. It said on Wednesday that its SA system-wide sales grew 6% in the six months to end-August.
Growthpoint dropped 2.64% to R22.88. The company said on Wednesday that its headline earnings per share (HEPS) decreased 1.1% to 158.1c in the year to end-June.
Grand Parade gained 0.35% to R2.84. The company said earlier that it expects its HEPS to increase between 171% and 191%, or between 7.97c and 10.21c, in the year to end-June.
Aspen Pharmacare rose 1.25% to R84.93. The drug maker said on Wednesday that its HEPS from continuing operations decreased by 11% to 1,227.6c.
Statistics SA is scheduled to publish mining production figures for July on Thursday. An expansion of 1% is the consensus according to a Bloomberg poll, from a contraction of 4.2% in June.