MARKET WRAP: JSE has best day in a month on renewed optimism on trade

The JSE recorded its biggest gain in a month on Thursday after US President Donald Trump confirmed he would meet with Chinese vice-premier Liu He on Friday.

It was reported earlier that the Chinese delegation meeting with US officials over trade would call the talks off a day early, but Trump confirmed the meeting for Friday late on Thursday.

World markets rose on the news, with the local bourse tracking those gains. Shortly after the JSE closed, the Dow was up 0.83% to 26,583.04 points. In Europe, the FTSE 100 had added 0.28%, France’s CAC 40 1.27%, and Germany’s DAX 30 0.58%. Earlier, the Shanghai Composite rose 0.78% and Japan’s Nikkei 225 0.45%.

The JSE all share gained 1.35% to 55,071.8 points and the top 40 1.49%; this was the former’s biggest gain since September 11. Banks fared best, up 2.52%, followed by resources, which added 1.97%. In an indication of the return to risk assets on the day, the gold index fell 2.79%.

TreasuryONE dealer Andre Botha said one positive that came out of today’s US-China talks was news of a possible currency pact between the world’s two biggest economies. “The stronger yuan over the past two weeks is making US exports to China more expensive.”

The rand gained significantly on the dollar in late trade, and was last seen 0.93% firmer at R15.0316/$. It was also 0.47% stronger at R16.56/€, but had fallen 0.41% to R18.5888/£.

Gains by larger diversified miners stood out on the JSE, with Anglo American up 4.5% to R357.72, Glencore 3.46% to R43.33, and BHP 1.99% to R315.46.

Nedbank led gains among the big-four banks, rising 3.21% to R229.35. Standard Bank added 2.88% to R176, FirstRand 2.82% to R64.55, and Absa 2.66% to R155.25.

PPC leapt 6.15% to R3.80 after it was reported that its CFO Tryphosa Ramano will leave Africa’s largest cement maker, weeks after new CEO Roland van Wijnen takes over. PPC said on Thursday that it and Ramano, who has been with the company for eight years, had mutually agreed to separate, and she will leave at the end of October. Romano will also be stepping down from the company’s board.

After initially falling in the morning Mondi ended the day up 1.81% to R291.80, despite warning earlier that earnings before interest, taxation, depreciation and amortisation (ebitda) had fallen 18% in its third quarter to end September.

Data from Statistics SA earlier showed that the mining sector suffered a surprise 3.2% year-on-year contraction in August, worse than the most pessimistic forecast by economists, confirming that the national economy is struggling to build momentum.

Manufacturing activity also contracted for the third consecutive month in August, falling 1.8%, though this was better than the expected 2.5% fall.

Attention will remain on the US-China trade talks on Friday, while minutes from the US Federal Reserve on Wednesday left the door open for another rate cut this year. The Fed, however, once again failed to say it was in an easing cycle. Any fall in US rates is good for emerging markets as global investors seek higher-yielding assets outside developed markets.

With Karl Gernetzky

- BusinessLIVE