MARKET WRAP: JSE closes higher and rand firms on repo rate cut

The JSE closed higher on Thursday as the rand firmed following the Reserve Bank’s decision to cut the repo rate 25 basis points (bps).

The Bank’s monetary policy committee (MPC) voted unanimously to cut the the rate by 0.25% to 6.5%, in line with market expectations. The Bank said it expects inflation to average 4.4% for 2019 and revised its GPD growth forecast from 1% to 0.6%. The rate cut is concurrent with expectations that the US Federal Reserve may begin an easing cycle and markets have priced in a 100% probability of a rate cut ahead of the Fed’s meeting at the end of July.

“Historically, whatever the Fed does, we tend to follow suit. A cut by the Bank sounded like a prudent thing to do. If the Fed gets more dovish at their next meeting then that would be an easy excuse for the Bank to cut again,” said Sanlam Private Wealth portfolio manager Nick Kunze.

Soon after the JSE closed, the rand had strengthened 0.92% to R13.8833/$, 0.95% to R15.5799/€, and 0.49% to R17.3361/£. The euro was flat at $1,1223.

Gold was last seen down 0.11% to $1,424.10/oz while platinum had gained 0.21% to $845.61. Brent crude dropped 2.17% to $62.10 a barrel.

Shortly after the JSE closed, the Dow had fallen 0.38% to 27,116.51 points. In Europe, the FTSE 100 had fallen 0.45%, France’s CAC 40 0.17%, and Germany’s DAX 30 0.7%.

Earlier, the Shanghai Composite fell 1.04%, Hong Kong’s Hang Seng 0.46%, and Japan’s Nikkei 225 1.97% as the US-China trade war continues to weigh on sentiment.

The JSE all share rose 0.41% to 57,872.50 points and the top 40 0.33%. Platinum miners climbed 3.63% and the gold mining index 3.18%.

Anglo American fell 0.59% to R378.97. The diversified mining company said on Thursday that production rose by 2% for the quarter to end-June citing the successful ramp-up at Minas-Rio and strong performance at its metallurgical coal project.

Kumba Iron Ore rose 1.78% to R483.27 after it said basic earnings per share are expected to be between R30.41 and R31.98, an increase of between 230% and 247%, for the six months ended June 2019.

Anglo American Platinum climbed 3.42% to R810, despite reporting on Thursday that platinum group metal production for its own-managed mines decreased by 4% to 633,600 ounces.

South32 fell 1.23% to R28.93, after the miner said on Thursday that it is considering bids for its coal assets in Mpumalanga. 

Cartrack dropped 2.34% to R18.75, after minority shareholders declined a mandatory offer by the company’s founder Zak Calisto to buy them out.

Richemont rose 0.27% to R120.79, after the luxury goods maker said sales increased by 9% at constant exchange rates for the first quarter ended June.

Liberty gained 2.9% to R111.95 after the insurer said on Thursday that normalised headline earnings per share are expected to increase by 45% to 55%, to between 698.9c and 747.1c.

Pioneer Foods jumped 6.3% to R77.60. The food producer issued a cautionary announcement on Monday saying  it had entered into unspecified  negotiations that could have a “material effect” on its share price.

SA Corporate Real Estate rose 1.47% to R3.45 after it said on Thursday that an independent investigation has found no evidence of fraud or corruption by management.

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