MARKET WRAP: JSE gains, while US labour market data exceeds expectations

The JSE closed higher on Friday concluding its best weekly gain in three weeks after US labour data came in stronger than expected, lifting global equities.

US non-farm payrolls rose by 128,000 in October, data showed on Friday, while the consensus was for only 89,000 new jobs according to Trading Economics. The data is considered an important indicator of the state of the US economy.

The latest job figures come just two days after the US Federal Reserve cut interest rates for the third time in 2019, as markets fear growth in the world’s largest economy could be slowing.

“The Fed is looking smart today. The mid-cycle adjustment call seems to tentatively be justified with a robust labour market that continues to keep this record expansion going strong,” said Oanda senior market analyst Edward Moya.

Sentiment was further boosted by comments from US commerce secretary Wilbur Ross, who said on Friday that the initial phase-one trade deal between the US and China is in “good shape” and that the deal could be signed in mid-November, Reuters reported. This offset earlier reports that Chinese officials had doubts about reaching a comprehensive, long-term deal with the US.

Shortly after the JSE closed, the Dow was up 0.91% to 27,292.54 points. In Europe, the FTSE 100 added 0.53%, France’s CAC 40 0.64%, and Germany’s DAX 20 0.83%. Earlier, the Shanghai Composite rose 0.99% and Hong Kong’s Hang Seng 0.72%, while Japan’s Nikkei 255 fell 0.33%. 

At the same time, the rand had firmed 0.47% to R15.0342/$, but was still looking set for its first week of losses in five. It had firmed 0.32% to R16.7924/€ and 0.25% to R19.4766/£. The euro was up 0.15% to $1.1168.

The rand is now down almost 3% for the week after breaking through R15/$ on Wednesday as investors found little comfort in finance minister Tito Mboweni’s medium-term budget policy statement (MTBPS).

Gold was down 0.1% to $1,511.05/oz while platinum was up 1.63% to $947.15. Brent crude climbed 3.24% to $60.62 a barrel.  

Locally, markets are expecting the release of a ratings review by Moody’s Investors Service late on Friday, with a fall in SA’s outlook from stable to negative partially priced in. 

“While we continue to expect the agency to deliver a negative outlook on SA’s rating, the possibility of receiving an actual downgrade is also material,” Investec economist Annabel Bishop said. “Our expected case is for Moody’s to drop the outlook on SA’s sovereign credit rating to negative, but not drop the credit rating to sub-investment grade in 2019. Much, however, will depend on whether the agency believes that the government can effect the repairs outlined in the 2019 MTBPS.” 

The JSE all share rose 0.4% to 56,650 points and it was up 2.73% for the week. Resources gained 1.05% and platinum miners 1.8%.

Taste Holdings said on Friday that it plans to exit its food businesses, which will include the sale of Starbucks and Domino’s Pizza. Its share price was unchanged at 7c.

- BusinessLIVE