MARKET WRAP: JSE caps best week since June on global optimism over trade

11 October 2019 - 19:31 By Andrew Linder

The JSE snapped a three-week losing streak on Friday, as global markets leapt on the news that talks between the US and China over their trade impasse are progressing well.

China and the US are in their second day of discussions to end their 15-month trade war, which has come at a great cost to the global economy.

By the JSE’s close the Dow Jones industrial average was 1.59% higher at 26,918.79 points, with the S&P 500 up by a similar margin. In Europe, the FTSE 100 had gained 0.65%, France’s CAC 40 1.47%, and Germany’s DAX 30 2.46%.

The rand also enjoyed good gains on Friday, trading more than 2% firmer at R14.7498/$ by 5.35pm. It had also strengthened 1.55% to R16.3102/€ but was flat at R18.7182/£. Gains against the pound were muted as the latter firmed against most other currencies on news that British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar were making progress towards a potential “pathway” to avoid a no-deal Brexit.

This is the second consecutive week of gains for the rand, which reached its best level in three weeks. It is now up 2.68% to the dollar in October, its biggest gain since June.

TreasuryONE senior dealer Andre Botha said, “Markets have been buoyed by the China-US trade talks seeming to be progressing well and positive Brexit news.” He added that gold had “slipped a little” as investors moved out of safe-haven assets.

Despite the firmer rand, the benchmark R186 government weakened. It was last bid at 8.235% from 8.215% previously.

The JSE all share rose 0.84% on Friday and the top 40 0.76%. Banks led the way, up 2.54%, with financials adding 2.33%. The gold index slumped 5.13%. Resources added 0.75% with the larger diversified miners performing best.

The all share ended the week up 2.86%, its biggest rise since early June. The index is now up 5.31% in 2019.

Anglo American gained 2.8% to R367.74 and Glencore 2.68% to R44.49. The is now up 14.11% this year, while the latter is down 16.95%.

Peregrine Holdings was down 1.23% to R16.87. The company said earlier that it expects its headline earnings per share (HEPS) to decrease between 35% and 45%, to between 45.1c and 57.9c, in the six months to end-September.

Nedbank did best among the big four in its sector, up 3.38% to R237.10. It was followed by Absa, adding 3.06% to R160, FirstRand 2.76% to R66.33, and Standard Bank 2.43% to R180.28.

Oil prices rose following a missile attack on an Iranian tanker in the Red Sea, near Saudi Arabia. Brent crude was last up 0.6% to $59.88 a barrel.

Gold fell on a drop in safe-haven demand. At 6.04pm, it was down 0.75% at $1,482.94 an ounce, while platinum fell 1.24% to $889.55.

Statistics SA will release the August retail sales data on Wednesday. Most economists are expecting the data to have softened following a recent Bureau for Economic Research survey that shows confidence among retailers has dried up along with sales volumes. Bloomberg’s median forecast is for a gain of 1.7%, from 2% in July.