JSE set for a strong start on Tuesday

The JSE is poised for a strong start on Tuesday due to stock market rallies in the US and Asia.

Overnight, the S&P 500 index closed 1.5% up and the Nasdaq Composite rose 2%. Weighed down by Boeing’s declines in the wake of the Ethiopian plane crash, the Dow Jones Industrial Average added 0.8%.

US markets were boosted by gains in the technology sector and the release of upbeat local retail sales data, Anchor Capital said.

The Shanghai Composite index was 1.6% higher in late-morning trade on Tuesday, buoyed by US stocks and optimism that the world’s two largest economies are making progress in their discussions towards a trade deal.

Hong Kong’s Hang Seng index was 1.5% up at the lunch break. Tencent’s rise by the same amount bodes well for Naspers’s opening on the JSE. Japan’s Nikkei 225 index was up 2%.

In Australia, where stocks were up 0.1%, JSE-listed BHP Group was up 1.5%.

Meanwhile, JSE-listed financial services groups FirstRand and Quilter are due to report financial results on Tuesday. FirstRand is the sixth-largest constituent of the top 40 index.

Investors are also likely to react to a trading statement issued by quick-service restaurant franchisor Famous Brands after the market’s close on Monday.

Famous Brands, which has been hobbled by its Gourmet Burger Kitchen chain in the UK in recent reporting periods, said it expected earnings in the year to February to fall more than 20%.

The owner of the Steers, Wimpy, Tashas and Mugg & Bean brands said that in the UK, sales across the group fell 7% in pounds.

It blamed its weak earnings numbers on Eskom’s blackouts and “economic and political uncertainty” across all its markets, including the UK, where the prospect of a hard Brexit looms large.

The rand was stronger on Tuesday morning, trading 0.32% up against the dollar at R14.28/$. Versus the pound, it was 0.18% firmer at R18.87/£ and against the euro it was 0.25% better at R16.08€.

“Increased risk appetite on the back of new assurances from the EU on the Brexit deal saw emerging-market currencies soar, with the rand clawing back significant ground,” said Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions.

The market will keep an eye on US inflation numbers on Tuesday, as well as the Brexit vote in the UK parliament.

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