MARKET WRAP: JSE records third day of gains on US-China trade-deal optimism

The JSE capped its third session of gains on Tuesday as investors bank on the imminent signing of the first phase of a trade deal between the US and China, while the rand reached a new 2020 low in intra-day trade. 

Reuters reported on Tuesday that China plans to purchase an additional $80bn worth of manufactured goods from the US in the next two years. As part of the deal, China will reportedly also buy more energy supplies amounting to more than $50bn.

This comes as the two countries are expected to sign a partial trade agreement this week. The US has now removed China from the list of countries it considers currency manipulators, five months after it was placed on the list by the US treasury department.

“The purchases represent a direct increase in economic activity and a thawing of the US-China tension, which it is hoped will open up international trade more generally,” London Capital Group head of research Jasper Lawler said.

Shortly after the JSE closed, the Dow was flat at 28,923.99 points. In Europe, the FTSE 100 was also little changed while France’s CAC 40 was down 0.11% and Germany’s DAX 30 0.1%.

Earlier, the Shanghai Composite fell 0.28% and Hong Kong’s Hang Seng 0.24% while Japan’s Nikkei 225 added 0.73%. 

The rand was weaker on Tuesday evening, paring some of its losses, however, after earlier reaching an intra-day low of R14.49/$, its worst level so far this year. At 5.18pm, it had fallen 0.12% to R14.408/$ and 0.23% to R18.7322/£, while it was flat at R16.0189/€. The euro had lost 0.14% to $1.1118.

The R2030 government bond was stronger, with the yield falling 1.5 basis points to 9.05%. Bond yields move inversely to their prices.

Gold was down 0.23% to $1,544.05/oz while platinum added 0.64% to $979.28. Brent crude was up 0.72% to $64.68 a barrel. “Oil volatility may calm down a bit until we get further details on the phase-one trade deal. Markets may be becoming overly optimistic on the trade front as we could easily see China come up short on delivering their promises and as the US ratchets up the transatlantic trade war,” said Oanda senior market analyst Edward Moya.

The JSE all share rose 0.69% to 57,967.1 points and the top 40 0.74%. Banks gained 1.97% while gold miners fell 2.77%.

Woolworths said on Tuesday that executive vice-president and president for Levi Strauss Americas Roy Bagattini had been appointed its new CEO. He will replace Ian Moir, who has headed the retailer since 2010. Woolworths’s share price jumped 8.3% to R52.20 on the news, its biggest one-day gain since August 2013.

On Tuesday, the South Gauteng high court upheld Old Mutual’s appeal against an order to temporarily reinstate its former CEO Peter Moyo. The insurer said this “confirms that Old Mutual acted lawfully in terminating Peter Moyo’s contract”. Its share price gained 3.25% to R19.69. It is still down more than 9%, however, since news of Moyo’s firing broke on May 24 2019.

Sasol confirmed on Tuesday that there had been an explosion and fire at its US Lake Charles Chemicals Project on Monday. Its share price fell 2.43% to R301.

mjoo@businesslive.co.za