MARKET WRAP: JSE gains as US-China trade war still in focus

The JSE was higher on Wednesday while global markets were mixed as investors monitor the latest developments in the US-China trade war.

China said on Tuesday that US legislation calling for action against its treatment of the Uighur Muslim minority will affect relations between the two economic superpowers, Reuters reported on Wednesday, adding to market concern about the trajectory of the protracted battle over trade.

The latest warning from China follows comments by US President Donald Trump earlier this week that a trade deal could be concluded only after the US election in 2020, prompting a sell-off in US markets.

“It still baffles me that investors hang on every Trump statement and tweet. His trade-deal optimism changes on a near-daily basis and yet investors are very sensitive to it. It’s probably a reflection of the relative lack of other talking points,” said Oanda senior market analyst Craig Erlam.

The US is expected to impose another tariff hike on Chinese goods from December 15, with analysts saying this will likely rattle markets.

“Risk aversion is set to engulf financial markets if Washington moves ahead with the tariff hikes, as trade tension intensifies and global-growth concern send investors rushing towards safe-haven assets such as gold,” said FXTM senior research analyst Lukman Otunuga.

Shortly after the JSE closed, the Dow had added 0.68% to 27,689.76 points. In Europe, the FTSE 100 was up 0.18%, France’s CAC 40 1.33% and Germany’s DAX 30 1.09%.

Earlier, the Shanghai Composite fell 0.23%, Hong Kong’s Hang Seng 1.25% and Japan’s Nikkei 225 1.05%.

The rand was fairly firm for most of Wednesday, strengthening to a best level of  R14.53/$ in intra-day trade. At 5.20pm, it had firmed 0.29% to R14.5932/$ and 0.17% to R16.1902/€, while it had weakened 0.63% to R19.1433/£. The euro had firmed 0.12% to $1.1094.

The R2030 government bond was  stronger, with the yield falling 6.5 basis points to 9.185%. Bond yields move inversely to their prices.

Gold was down 0.28% to $1,472.8/oz and platinum 0.78% to $902.68. Brent crude climbed 3.08% to $62.88 a barrel, amid speculation that oil cartel Opec might extend oil output cuts at their meeting on Thursday.

Earlier, data showed the Standard Bank purchasing managers’ index fell to 48.6 points in November from 49.4 in the previous month.

The JSE all share gained 0.99% to 55,022.9 points and the top 40 1.06%. Industrials rose 1.09% and financials 1.1%.

MTN gained 0.95% to R86.82. The mobile operator said on Wednesday that it will oppose recommendations made by the Competition Commission earlier this week. The commission said MTN and Vodacom should lower data prices by as much as 50%. 

African Phoenix Investments climbed 5.56% to 76c. It said on Wednesday that it is looking into a merger with its new shareholder, investment holding company Zarclear.

Investment company Sygnia said on Wednesday that assets under management and administration rose 7.1%. to R238.4bn in the year to end-September. Its share price, however, fell 2.44% to R10. 

Astral Foods gained 0.25% to R201.50. It said earlier that it had secured an interdict to stop Eskom from interrupting electricity supply to the Rand West City local mnicipality, saying the supply disruptions have had a “profound effect” on the company.

mjoo@businesslive.co.za