JSE gains as market navigates weaker rand and renewed trade concerns

The JSE ended Wednesday slightly higher as the market battled to find direction in a weaker rand environment and on a possible renewed flare-up in trade tension.

Sentiment towards emerging markets turned negative amid continued weakness in the Turkish lira.

Banks, financials and retailers were sold off on the day, while gold stocks recovered on a higher metal price. But platinums remained weak. Naspers gained some traction toward the close.

As the euro rose to $1.17 from $1.13 against the dollar during the past two weeks, it removed all the pricing in of political and economic risks from Turkey and other emerging markets, Societe Generale analysts said. A stronger dollar would worsen Turkey’s debt.

The situation in Turkey, however, hasn’t changed and the lira continues to fall. But analysts have taken the view that European banks have not lent enough to Turkish companies to be a concern if those companies cannot repay those loans, Dow Jones Newswires reported.

Although a trade deal between the US and Mexico has been struck, global trade tension remains.

“There is still a long way to go with President Donald Trump recently again threatening tariffs on cars from Europe and the US, while preparing for another $200bn of tariffs against China,” said Oanda analyst Craig Erlam.

At the same time, Brexit negotiations appeared not to have progressed that well, with the UK and EU appearing far from agreeing on the terms of the divorce. The fear is that the longer negotiations go on, the more likely a no-deal Brexit could become a reality, he said.

The pound received some support in late trade, briefly touching $1.30 after acknowledgement from EU chief negotiator Michel Barnier that the EU was prepared to offer a partnership with the UK. “This is a significant shift from the previous position that the UK must choose a pre-existing model in any future relationship,” Erlam said.

The all share closed 0.21% higher at 60,165.50 points and the top 40 rose 0.27%. Resources gained 1.59%, the gold index 1.43% and industrials 0.16%. Food and drug retailers dropped 2.04%, banks 1.7%, general retailers 1.22% and financials 0.85%.

The all share has now posted gains for 10 consecutive days, the first time this has happened since late 2013.

BHP climbed 2.18% to R318.79.

British American Tobacco added 1.89% to R721.

Standard Bank dropped 2.67% to R189.53 and Absa 2.02% to R164.72.

Steinhoff rocketed 25% to R2.75. Earlier in the day, management told Parliament that the threats of imminent collapse had effectively been averted.

Growthpoint dropped 1.41% to R25.80 after reporting dividend growth of 6.5% for the year to end-June. It forecast full-year growth of 4.5% for the next financial year.

Nepi Rockcastle closed 1.93% higher at R135.10. The group earlier reported distributable earnings per share for the first half of 2018 to end-June rose 12.9%.

The Financial Sector Conduct Authority (FSCA) is conducting an investigation into possible insider dealing or market manipulation in Nepi Rockcastle’s shares.

Naspers rose 0.56% to R3,580.

Curro Holdings dropped 0.78% to R32, with some analysts believing the group was overvalued at those levels, when considering its reported earnings growth.