JSE buoyant as US and China close in on deal

The JSE closed at its strongest level in almost a month on Tuesday as the US and China edged towards clinching a comprehensive trade deal, boosting hopes that uncertainty over potential tariffs will end.

Local stocks followed gains by Asian counterparts overnight. Japan’s Nikkei 225 rose 0.47%, the Shanghai composite 1.27% and Hong Kong’s Hang Seng 1.22%. While SA was closed for a public holiday on Monday, stocks in the US and Europe hit records after China and the US — the world’s two biggest economies — struck a preliminary deal at the weekend.

By the end of trading in Johannesburg on Tuesday, the global rally had begun to lose some steam. The Dow Jones industrial average was up 0.3% at 7.01pm, and the UK’s FTSE 100 had gained 0.13%. France’s CAC 40 and Germany’s DAX were both lower.

The JSE all share gained 1.27% to 57,467.1 points, with the top 40 rising 0.98%. It was the main index’s biggest gain since November 19.

The rand generally had a quiet day, dropping 0.2% to R14.3933/$. It was boosted against the pound, reaching its strongest level since December 3 after newly elected Prime Minister Boris Johnson’s plan to rule out an extension of the post-Brexit transition period revived concern that the UK could crash out of the EU without a trade deal at the end of 2020.

SA’s currency rose 1.3% to R18.9125/£ and was 0.3% down against the euro at R16.0624.

“It appears Johnson is swearing to make the annoying Brexit saga an open-ended book affair,” said AxiTrader chief Asia market strategist Stephen Innes.

“The headline sent shivers down the spines of those who believed that the prime minister would use his significant majority and shift to a more harmonious relationship with the EU,” Innes said.

Gold was down 0.1% to $1,477.16/oz and platinum fell 0.7% to $925/oz. Brent crude added 0.9% to $65.94 a barrel.

EOH, which said on Friday it had exceeded its R1bn disposal target for 2019 as it seekst to reduce debt and slim down a business that has been hard hit by corporate governance issues, was up 3.6% to R12.82. The stock is still down nearly 60% in 2019.

Sasol was among the standout performers, jumping about 12% on Tuesday after it reported rising production at its embattled Lake Charles Project in the US. Its jump was the biggest since it removed its joint CEOs at the end of October.

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