JSE opens higher as US data make hawkish Fed stance less likely

The JSE was firmer in morning trade on Monday in renewed risk-on trade, as the market took the view that it was unlikely the US Federal Reserve would follow a more hawkish policy.

The all share crossed 58,000 points for the first time in three weeks as miners and industrials combined with banks and retailers on a stronger rand to boost the overall market.

The release of nonfarm payroll data in the US on Friday did not convince the market that the Fed would raise rates more aggressively. Although the number of US jobs created in June came in higher than expected, hourly earnings growth disappointed, remaining 2.7%. The market had expected 2.8%.

The Fed watches the tempo of wage growth, which will cause higher inflation, before it is likely to embark on a higher interest-rate policy. The market has priced in a further two rate hikes in the US in 2018, following the two already implemented by the Fed, with interest rates now at 2%.

“It is clear market participants were paying most attention to the earnings numbers,” FxPro analysts said.

They said soft data somewhat undermined the Fed’s position on the way to tightening monetary policy.

“Slower wages growth revived speculation that it would not be easy for the Fed to actively raise rates in subsequent quarters if it would not face a visible inflation threat,” FxPro said.

Markets shrugged off concern of an escalating global trade war after the $34bn in tariffs imposed by the US on Friday. Asian markets were higher after the Dow gained 0.41% at the close on Friday.

The Nikkei 225 rose 1.21%, the Shanghai Composite 2.47% and the Hang Seng 1.4%.

At 10.01am the all share was 1.33% higher at 58,078 points and the top 40 rose 1.46%. Resources were up 2%, industrials 1.34%, food and drug retailers 1.27% and banks 1%.

BHP lifted 2.24% to R305.01 and Anglo American 2.07% to R310.86.

Sasol gained 1.83% to R512.18. Brent crude was up 0.53% to $77.50 a barrel.

Imperial Holdings rose 2.1% to R208.13.

FirstRand added 1.21% to R65 and Standard Bank 1.07% to R194.06.

Quilter added 1.83% to R27.33 and Sanlam 1.36% to R69.92.

Steinhoff International firmed 5.99% to R1.77.

Hammerson was up 0.54% to R98.46 among property stocks.

Naspers rose 1.87% to R3,502.69.

Sappi added 2.24% to R92.39.