JSE lifts in risk-on trade, led by banks

The JSE rose on Thursday, buoyed by risk-on sentiment on global markets as well as a trading statement from Nedbank.

Nedbank’s upbeat earnings report buoyed banks, which also found support from overnight gains by the rand. The local currency was, however, weaker at the JSE’s close, after disappointing domestic data earlier as well as euro weakness.

Producer price inflation came in higher than expected, at 5.9% year on year in June, compared to market consensus of between 4.9% and 5.2%.

While this should put upward pressure on consumer inflation, it was unlikely to breach the Reserve Bank’s 6% upper target over the next three years, Nedbank Corporate and Investment Banking analysts said.

Earlier, the rand firmed to a three-week high of R13.0956 to the dollar, bolstered by US President Donald Trump and European Commission president Jean-Claude Juncker’s agreement to resolve their differences on trade.

Later in the day, the European Central Bank’s (ECB’s) monetary policy announcement held no major surprises.

Focus is expected to remain on the ongoing Brazil, Russia, India, China and SA (Brics) summit, which continues on Friday, as well as highly anticipated US GDP growth numbers.

The all share firmed 0.63% to 56,743.3 points and the top 40 rose 0.76%. Gold miners lifted 2.19%, platinums 1.85%, banks 1.15% and food and drug retailers 1.31%.

Rand hedges moved in starkly different directions, with AB InBev falling 3.66% to R1,349.75, after earlier reporting flat global sales and falling volumes in SA in the six months to end-June.

British American Tobacco jumped 5.87% to R730, after earlier reporting a 56.9% jump in revenue for the six-months to end-June, driven by an 11% rise in cigarette sales.

Nedbank edged 0.19% higher to R267.93, after the banking group said in a trading statement that headline earnings per share (HEPS) to end-June were expected to rise between 23% and 28%.

Capital & Counties dropped 5.27% to R47.10. The property group announced on Wednesday that it was on track to split into two separate companies.

Intu Properties plunged 9.09% to R28.50, after earlier slashing its interim dividend to end-June to four UK pence, compared to 14p in the prior period.

Hammerson slumped 5.34% to R87.13.

Vodacom rose.92% to R132.68 and MTN 3.01% to R107.84.

Shortly after the JSE closed, the Dow was up 0.62% to 25,569.20 points, while in Europe, the export-heavy DAX 30 had gained 1.76% and the CAC 40 0.63%. The FTSE 100 was flat.

At the same time, platinum had lost 1.29% to $833.32 an ounce and gold 0.4% to $1,226.61. Brent crude was 0.31% higher at $74.35 a barrel.