JSE closes firmer but opening rally loses steam as banks fall on the rand

The JSE closed firmer on Thursday as renewed risk-on trade boosted miners and industrials, while banks lost ground after the rand weakened to just below R13 to the dollar, its worst level in six months.

Resources and retailers were the early gainers, and while miners held on to higher levels, retailers shed value toward the close, due to the rand.

Slightly upbeat manufacturing data provided some support for local stocks, but the market could not hold on to firmer levels reached on the day as caution remained the watchword following shock GDP data released earlier this week.

Total output in the manufacturing sector increased by 1.1% year on year in April, which was slightly higher than the forecast of 1%, following a 1.6% drop in March.

“The figures were encouraging, and in line with our view that the economy would recover during the year after a disappointing first quarter,” Nedbank analysts said. They still expected interest rates to remain unchanged for the rest of this year, before rising moderately late in 2019.

Global investors took the view that the global economy would be able to shake off continuing tension in international trade, Dow Jones Newswires reported.

The European Central Bank (ECB) indicated on Wednesday that it could decide as soon as next week to wind down its monthly €30bn bond-buying programme. The ECB’s chief economist, Peter Praet, said the bank was increasingly confident that inflation would soon rise toward the bank’s target of just below 2%, a milestone it has missed for years.

The comments surprised investors, many of which had not expected a decision on the future of ECB stimulus until July, spurring a rally in the euro and a rise in government bond yields.

The Dow was 0.4% up at the JSE’s close, while European markets were mostly lower. Brent crude rose 0.95% to $76.50 a barrel.

The all share closed 0.53% higher at 58,391.60 points and the top 40 rose 0.58%. The platinum index gained 2.94%, resources 1.88%, gold 1.42%, and industrials 0.5%. Financials shed 0.65%, banks 0.64%, and food and drug retailers 0.27%.

Anglo American gained 1.5% to R327.18. Sasol jumped 2.5% to R492.

Sanlam closed 3.71% lower at R72.70 following the release of a disappointing trading update on Wednesday.

Steinhoff International jumped 11.4% to R1.27 after it announced that creditors had given its European subsidiaries a lifeline to the end of June.

Growthpoint shed 0.44% to R26.97. It was earlier announced that Estienne de Klerk would take over as CEO for SA from Norbert Sasse, who would assume a new role with a focus on the company’s offshore expansion.

Fortress B was down 0.3% to R16.61.

Telkom added 1.05% to R52.70 and Naspers 1.08% to R3,422.

The top 40 Alsi futures index gained 0.45% to 52,070 points. The number of contracts traded was 22,222 from Wednesday’s 19,545.