JSE turns positive as risk-on trade boosts banks and retailers

After a flat opening on Friday, the JSE gathered momentum in the afternoon to close higher, as risk-on trade took off following the release of weaker-than-expected US jobs data.

Naspers led industrials higher, with global miners ending the day firmer amid volatile trade in the dollar, and despite weaker copper prices.

Nonfarm payrolls increased by 157,000 in July, below the expected 190,000, and their lowest gain since March.

The US unemployment rate fell to 3.9% from 4%, while average hourly earnings — an important barometer for inflationary pressures in the US — increased 2.7%, unchanged from the previous month.

The numbers make it unlikely that the US Federal Reserve will adopt a more hawkish stance for the rest of 2018.

Stanlib economist Kevin Lings said the latest US labour market report was disappointing, but not especially problematic, particularly since the previous two months’ data were revised significantly higher. “This, together with solid business activity data, strong confidence indicators, as well as President Donald Trump’s fiscal stimulus package, should encourage the Federal Reserve to continue to hike interest rates,” he said.

Platinum and gold stocks were buoyed by higher metal prices, with platinum jumping nearly 2% to $840 an ounce. Brent crude edged higher to $73.50 a barrel.

Brent was set for its fourth week of losses in five weeks amid signs that crude inventories at the biggest US storage hub would continue to fall.

The rand shrugged off negative emerging-market sentiment, with the Turkish lira falling to historical lows after reports that the US had imposed sanctions against Turkish officials who had participated in the detaining of a US pastor. It had gained more than 1% on the dollar by the late afternoon to R13.3069 from R13.4605, but still ended the week lower.

The all share closed 1.15% higher at 57,118 points and the top 40 rose 1.29%. Food and drug retailers gained 1.74%, banks 1.58%, resources 1.49%, industrials 1.1%, financials 0.94% and general retailers 0.84%.

The all share ended the week flat.

BHP added 1.14% to R292.97.

ArcelorMittal jumped 6.52% to R4.25, bringing gains to almost 33% in three days, following recent results that showed the local steel producer was profitable again, after years of losses. It rose nearly 51% in July.

Sibanye-Stillwater leapt 5.32% to R8.71.

FirstRand rose 2.12% to R68.77 and Absa 2.37% to R171.26.

Woolworths recovered 1.88% to R51.90 and Shoprite 2.99% to R215.26.

Nepi Rockcastle climbed 0.82% to R119.98.

Mondi jumped 6.54% to R383.90 after interim results beat market expectations. Basic underlying earnings rose 26% to end-June.

Naspers ended the day 1.91% higher at R3,235.99.