JSE gains as banks and financials recover

The JSE recorded its first positive close in six days on Tuesday, with Naspers recovering Monday’s losses, as banks and financials firmed on a stronger rand.

The rand reached a day’s best of R13.187 to the dollar from Monday’s R13.2205, despite a slightly stronger greenback after US Federal Reserve chair Jerome Powell said the Fed’s gradual rise in interest rates would continue for now, to keep inflation near target amid a strong US labour market.

The Dow was flat at the JSE’s close. Earnings were again in focus on Tuesday, with heavyweights UnitedHealth, Johnson & Johnson and Goldman Sachs slated to report ahead of the opening bell, Dow Jones Newswires reported.

European markets were higher after jobs data out of the UK met market expectations, strengthening the likelihood of an interest-rate hike next month.

Overall market sentiment remained vulnerable to bearish sentiment, with Bank of America Merrill Lynch’s fund manager survey for June noting that global equity allocation fell to a monthly net 19% overweight, its lowest level since November 2016.

The largest monthly drop was in emerging-market equities, which fell to 1% underweight, their lowest level in two years.

However, allocation to US equities jumped to 9% overweight, the highest since February 2017, having been 28% net underweight in September 2017. There was also an outflow from European equities.

“Investor sentiment was bearish in June, with survey respondents eyeing the risks from a possible trade war,” said chief investment strategist Michael Hartnett. “Equity allocation has fallen notably while growth and profit expectations have slumped.”

Brent crude was marginally higher at $72 a barrel. Metal prices were weaker, however, with platinum falling 0.8% to $816.53 an ounce and gold 1% to $1,228/oz.

Although President Donald Trump was heavily criticised in the media after appearing to warm-up to President Vladimir Putin at the Helsinki conference, markets showed little reaction to accusations that his actions were “treasonous”.

“Trump’s cosying up to Putin hasn’t been a big market story as investors remained focused on the possibility of a trade war and the upcoming earnings season in the US,” Oanda analyst Craig Erlam said.

The all share closed 1.21% higher at 56,113.10 points and the top 40 gained 1.33%. Banks rose 2.57%, financials 1.39%, industrials 1.32%, food and drug retailers 1.25%, general retailers 1.18% and resources 0.74%. The platinum index lost 0.47%.

Sasol lost 0.9% to R492.40 and British American Tobacco 1.76% to R665.

FirstRand jumped 3.17% to R65.14 and Standard Bank 3.05% to R194.74.

Steinhoff fell 4.41% to R2.82.

Hyprop was up 2.29% to R103.01.

MTN rose 3.29% to R107.80.

Naspers gained 2.13% to R3,371.90.

With Bloomberg