MARKET WRAP: JSE closes higher as rate-cut rhetoric boosts global stocks

The JSE closed higher on Thursday after a dovish US Federal Reserve lifted global stocks.

The Fed kept interest rates on hold but hinted at imminent rate cuts on concerns about the prolonged US-China trade war and weak inflation. The rate-cut rhetoric gained momentum this week after European Central Bank (ECB) president Mario Draghi signaled that the ECB may loosen monetary policy should inflation not pick up. On Thursday, the Bank of England also opted to keep rates unchanged at 0.75%.

Global markets were boosted by the Fed’s comments on interest rates and on hopes that the US and China may soon reach a trade deal. Shortly after the JSE closed, the Dow had gained 0.66% to 26,679.56 points. In Europe, the FTSE 100 was up 0.46%, France’s CAC 40 0.47% and Germany’s DAX 30 0.49%. The S&P 500 earlier hit a record high of 2,956.2 points. In Asia, the Shanghai Composite gained 2.38%, Hong Kong’s Hang Seng 1.23% and Japan’s Nikkei 225 0.6%.

Pressure on the dollar boosted the rand, which reached its best level in a month — hitting R14.19/$ in intra-day trade. By the close of the JSE, the rand had strengthened 0.11% to R14.31/$, 0.37% to R16.1427/€ and  0.31% to R18.1679/£. The euro was 0.48% firmer at $1,1281.

The benchmark R186 government bond was stronger, with its yield falling 10 basis points to 8.07%. Bond yields move inversely to bond prices.

Gold was up 1.83% to $1,385.11/oz, its highest level in five years, while platinum had fallen 0.2% to $810.51. Brent crude leapt 3.15% to $64.20 a barrel, driven by escalating tension between Iran and the US after the former was blamed for shooting down a US military drone. US President Donald Trump tweeted that Iran would soon regret its actions.

The JSE all share gained 0.7% to 58,973.60 points and the top 40 0.81%, while gold miners jumped 5.98%. 

AngloGold Ashanti jumped 7.47% to R241.99, Harmony 7.77% to R29.97, Gold Fields 3.66% to R76.48, and Sibanye 5.64% to R15.35.

Naspers gained 0.4% to R3,478. The company said on Thursday that its Naspers Foundry start-up fund had made its first investment, worth R30m, in SA technology start-up SweepSouth.

KAP Industrials slumped 12.17% to R5.70, its lowest level in more than three years.

Steinhoff fell another 5.84% to R1.29. It released its restated 2018 results earlier this week.

Peregrine gave up 0.33% to R17.94. The financial services company said it had written down the value of its investment in Java Capital by R100m, citing a slowdown in deal flows. 

Vivo Energy dropped 1.73% to R25, after saying on Thursday that it had entered into a joint venture with Kuku Foods East Africa, to open KFC restaurants in Rwanda, Kenya and Uganda.

On Friday, the eurozone and the US will release IHS Markit manufacturing purchasing managers’ index figures for June.

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