MARKET WRAP: JSE closes higher amid tentative risk-on sentiment

The JSE closed higher on Thursday as a result of an improved risk environment after US GDP data came in slightly lower than expected, thereby making it unlikely that the US Federal Reserve would become more hawkish.

US GDP rose at a 2% annualised rate in the first quarter, revised from a previous estimate of 2.2%.

The rand weakened to within a hair’s breadth of R14/$ in intraday trade, before recovering to R13.7637 later in the day.

Market focus was on this week’s EU summit. The euro gained on positive sentiment ahead of the summit, despite myriad challenges, with the pound falling to a two-month low amid criticism that UK Prime Minister Theresa May had no meaningful Brexit plan to present to EU leaders.

Discussion at the summit is set to be dominated by Brexit and immigration issues, with Italy taking a strong stance against illegal immigration from Africa, which usually hits its shores first.

The Dow was under pressure at the opening, falling 0.28%, before recovering to trade flat. European markets were lower, with the FTSE 100 dropping 0.25% and the Dax 30 1.56%.

The risk-on rally in early trade on the Dow on Wednesday proved to be short lived, with comments by US President Donald Trump’s chief economic adviser, Larry Kudlow, re-igniting the fear of a hard-line approach when he said that “Trump was not retreating on China”.

Brent crude lifted 1.13% to $78.21 a barrel.

The all share ended the day 0.77% higher at 55,795.20 points and the top 40 added 0.91%. Banks rose 1.3%, industrials 1.03%, financials 0.69%, property 0.5% and resources 0.32%. The gold index shed 0.86% and general retailers 0.18%.

Naspers climbed 2.95% to R3,271.82.

Sasol rose on a rising oil price, closing 2.43% higher at R485.50.

FirstRand added 2.55% to R60.30.

Newly listed Quilter dropped 1.61% to R26.90 and Old Mutual fell 0.56% to R28.35.

Steinhoff International slipped 1.63% to R1.21.

The rand was at R13.873 to the dollar at the JSE’s close, from Wednesday’s R13.8569.

Local bonds were weaker, with the yield on the benchmark R186 bond rising to 8.93% from 8.89%. The US 10-year was last seen at 2.8377%.

The top 40 Alsi futures index gained 0.97% to 50,016 points. The number of contracts traded was 26,163 from Wednesday’s 34,112.