MARKET WRAP: JSE and rand rally ahead of Moody’s decision

29 March 2019 - 18:53 By Sunita Menon
Picture: JSE
Picture: JSE

The JSE rallied on Friday ahead of Moody’s Investors Service’s pronouncement on SA’s credit rating, expected later in the evening, on renewed trade optimism between the world’s two largest economies.

Hopes for a new round of trade talks between the US and China overshadowed lingering worries that the global economy was slowing. Reuters reported that China had made “unprecedented proposals”, including on the transfer of technology, in its talks with the US.

US treasury secretary Steven Mnuchin said in a tweet on Friday that he and US trade representative Robert Lighthizer had concluded “constructive” trade talks in Beijing. Discussions between the two sides are expected to continue in Washington next week.

The JSE all share rose 0.72% to 56,462.6 points while the top 40 was up 0.74%. Platinums gained 1.04% and banks 1.41%, while resources gave up 0.22% and gold miners 0.96%.

JSE heavyweight Naspers was 0.85% higher at R3,332.14 after reaching its best level in about seven months, of R3,363.75, earlier in the day.

EOH Holdings fell another 9.25% to R10.40, as the market continued to digest the implications of company’s loss of its Microsoft contract.

Lewis slumped 4.31% to R31.10 and Nampak 6.03% to R11.22.

Murray and Roberts climbed 8.1% to R14.28. Woolworths was up 5.06% to R46.48.

Despite trading ex-dividend Old Mutual gained 2.68% to R21.87, after CEO Peter Moyo said in the company’s annual report it was confident it would reach its medium-term targets, despite fragile investor confidence.

Next week, local data will show the preliminary results of revenue collection for 2018/2019, which the Treasury expects to show a shortfall of R42.8bn, while the Absa purchasing managers’ index, which gauges activity in the manufacturing sector, is expected to reflect a depressed mood as power cuts dent production.

Despite having weakened significantly through the week, partly because of the Turkish lira’s decline, the rand made something of a comeback on Friday. At 5.05pm, fighting jitters ahead of Moody’s announcement, it had strengthened 0.93% to R14.4733/$. It was up 0.91% to R16.2483/€ and 1.22% to R18.8239/£.

“The most likely outcome is for Moody’s to downgrade their view [outlook] to negative, which we feel has been priced into the market,” TreasuryOne analysts said. “There is likely to be a knee-jerk weaker for the rand should that be the case, but we feel that such a knee-jerk can’t be sustained should [the rating agency] just change their [outlook], and it will fizzle out quickly.”

Shortly after the JSE closed, the Dow was up 0.31% to 25,804.66 points, while in Europe the FTSE 100 had added 0.55%, the CAC 40 0.82% and the DAX 30 0.81%.

At the same time gold had gained 0.37% to $1,294.93/oz and platinum 0.5% to $844.57. Brent crude was 0.75% lower at $67.46 a barrel.