The JSE recovered along with Asian markets on Tuesday as investors reassessed the ongoing tension between the US and Iran.

Markets were fairly calm on the day, with traders keeping an eye on developments in the conflict. Earlier, US secretary of defence Mark Esper refuted reports that the US has plans to remove its troops from Iraq.

“As we've seen plenty of times before, investors have a remarkable ability to move past major geopolitical shocks rather quickly. Ultimately, every sell-off on the back of one of these events is just an opportunity to buy a dip. As long as it’s not followed with a rapid retaliation and escalation, which this has not,” said Oanda senior market analyst Craig Erlam.

Tension between the US and Iran heightened after top Iranian commander Qassem Soleimani was killed during a US airstrike in Baghdad last week. Uncertainty about the prospects of the conflict fueled fears that the situation may have an effect on global oil production, with the Middle East contributing almost 50% to global output.

This  pushed the price of oil to its highest level in more than seven months on Monday. According to FXTM senior research analyst Lukman Otunuga, geopolitical tension may not be enough to sustain an oil rally in the medium to long term. “Although geopolitical shocks could offer a short-term boost, developments revolving around the US-China trade talks and global growth remain the primary drivers influencing oil’s outlook.” 

Bloomberg reported on Tuesday that Iran said it is evaluating 13 possible options to avenge the US attack.

Locally, the rand began on a positive note but pared gains during the course of the day. The local currency is down 2.4% so farin 2020, after ending 2019 2.46% firmer against the dollar. At 5.20pm, it had weakened 0.73% to R14.3116/$, 0.21% to R15.9425/€ and 0.29% to R18.7632/£. The euro had fallen 0.52% to $1.1139.

The R2030 government bond was weaker with the yield rising half a basis point to 9.05%. Bond yields move inversely to their prices.

Gold was up 0.35% to $1,570.917/oz while platinum was down 0.37% to $959.35. Brent crude lost 0.35% to $68.18 a barrel. 

Shortly after the JSE closed, the Dow was down 0.33% at 28,607.36 points. In Europe, the FTSE 100 and France’s CAC 40 were flat while Germany’s DAX 30 added 0.59%.

Earlier, the Shanghai Composite rose 0.69%, Hong Kong’s Hang Seng 0.34% and Japan’s Nikkei 225 1.6%.

The JSE all share rose 0.33% to 57,384.4 points and the top 40 0.3%. Industrials gained 0.94%, while gold miners dropped 2.57%. 

AngloGold Ashanti dropped 3.81% to R322.20, Gold Fields 2.53% to R94.42 and Harmony 0.81% to R54.77.

Absa said on Tuesday that it had concluded a $497m (R7bn) agreement with the Multilateral Investment Guarantee Agency to help the bank expand financing in seven Sub-Saharan African countries. The deal will also protect Absa against “risks related to the mandatory capital reserves that Absa and other banks are required to hold with central banks”, it said. Its share price was down 2.6% to R141.58.


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