MARKET WRAP: JSE advances amid firm global markets and rosy inflation figures

The JSE continued its recovery on Wednesday, boosted by better-than-expected local consumer inflation data as well as global optimism that increased fiscal spending by major economies was on its way.

Inflation, as measured by the annual change in the consumer price index, moderated to 4% year on year in July, well below  market expectations of a 4.4% rise as well as the midpoint of the Reserve Bank’s 3%-6% target range.

This has somewhat bolstered the chances of the SA Reserve Bank cutting interest rates again in September, which will further boost SA’s tepid economy; but analysts warned that risks to the rand persist, and policy makers may remain cautious.

This latest inflation figure will, however, compel the Bank to justify any decision not to cut interest rates, when considering SA’s growth and unemployment problems, PPS Investments portfolio manager Luigi Marinus said in a note.

Interest-rate sensitive stocks including banks and retailers fared well on the day, while higher platinum and oil prices offered support to some miners.

The all share gained 0.66% to 54,638 points and the top 40 0.6%. Platinums added 3.03%, banks 1.84% and general retailers 2.01%.

Shortly after the JSE closed, the Dow was up 1.03% to 26,229 points, while in Europe, the FTSE 100 had gained 1.04%, the CAC 40 1.55% and DAX 30 1.21%.

Gold had fallen 0.28% to $1,503.40/oz while platinum was 0.34% higher at $851.82. Brent crude rose 1.2% to $60.82 a barrel.

Global markets were generally positive, with the prospects of fiscal stimulus from China and Germany continuing to offset investor concerns about a slowing global economy.

There was an element of caution on global markets, however, with focus on the release later of US Federal Reserve minutes from their latest meeting. US Fed chair Jerome Powell’s speech at the Jackson Hole conference in Wyoming on Friday is the week’s main event.

Other risk factors persist, including a warning by France earlier that a no-deal exit by the UK from the EU was now the most likely option. A German 30-year bond auction earlier in the day also failed to attract demand, which some analysts saw as reflecting the fact that the $16-trillion already in negative-yielding bonds was finally taking its toll on investor demand for safe assets.

Diversified miner BHP fell 2.21% to R316.16 and Anglo American 1.43% to R317.62.

Sasol recovered 3.32% to R280.64, but remains 9.69% lower so far in August. On Wednesday, the chemicals giant moved to deny that it provided any market-sensitive information to analysts as it engaged with them over the delay of its 2019 annual financial results.

Advtech added 4.17% to R11.48. It said earlier that headline earnings per share for the six months to end-June were expected to rise by between 25% and 35%.

Assore gave back 0.47% to R312.61. It said earlier that higher chrome iron ore prices had helped boost headline earnings between 20% and 28% in the year to end-June.

Rand hedge Richemont rose 1.94% to R120.50 and British American Tobacco 0.74% to R559.61.

[email protected]