JSE starts June on positive note

“As long as the euro gains on the dollar, we will see positive sentiment towards emerging markets,” said BP Bernstein Stockbrokers analyst Vasilis Girasis. He said, however, there might be some pullback in commodities going forward.

The rand firmed against the dollar on the day, supporting a broad-based recovery in banking and retail stocks. But gold shares were lower after the euro firmed to $1.1722 from $1.166.

May was the second-worst month for 2018 so far, after March’s 4.89% loss. The all share is down 2.75% in 2018.

As in previous months, the all share remains tied to the fortunes of market heavyweight Naspers. After jumping 5% on Friday, the first trading of June, Naspers gained a further 2.18% on Monday, narrowing 2018’s losses to about 5.28%.

Girasis said he was cautious on Naspers. “It has broken out of the 200-day moving average, and might go higher, but I keep a tight stop-loss on the share.”

Analysts were hesitant to describe June’s upbeat start as the beginning of a new positive trend, as many uncertainties still remained.

At a Group of Seven (G-7) meeting on Saturday, finance ministers from Canada, France, Germany, Italy, Japan and the UK issued a rare rebuke to the US, expressing their “unanimous concern” over Trump’s decision to place tariffs on imports from his major allies. Tariffs and trade are also likely to feature highly on the agenda when leaders of the G-7 nations including the US, hold talks in Canada on Friday and Saturday.

Trump was clearly taking a big risk, said Oanda analyst Craig Erlam. “The angry responses from various politicians in response to Trump’s tariffs on steel and aluminium, and the counter measures that will likely follow, doesn’t fill anyone with optimism.”

Earlier, investors cheered Friday’s US jobs data, which showed the economy was in better health than expected. That spurred a move back into riskier assets, such as stocks, after political upheaval in Italy earlier last week sparked a flight into safe havens such as bonds, Dow Jones Newswires reported.

Local bonds edged firmer on Monday, with the R186 last bid at 8.56%, from 8.61%, while the rand was up 0.7% on the dollar, at R12.5781 to the dollar.