MARKET WRAP: JSE closes higher as risk sentiment improves

The JSE closed higher on Tuesday, with mining stocks leading the way, as global sentiment towards riskier assets improved.

Risk-on trade returned after the US and Mexico averted a 5% tariff on Mexican imports. The two countries reached an agreement to curb illegal migration from Mexico to the US. However, global markets continue to monitor the US-China trade war after US President Donald Trump said he is prepared to impose further tariffs on China if the two economic superpowers do not reach an agreement at the G20 summit later this month. 

At the close of the JSE, the Dow had gained 0.25% to 26,127.58 points. In Europe, the FTSE 100 was up 0.34%, France’s CAC 40 0.53% and Germany’s DAX 30 1.04%. Earlier, in Asia, the Shanghai Composite gained 2.58%, the Hong Kong’s Hang Seng 0.76% and Japan’s Nikkei 225 0.33%.

The rand gradually recovered throughout the day, in its third consecutive day of gains, after it fell through R15/$ last week to its lowest level in eight months following the ANC’s tit-for-tat on the mandate of the Reserve Bank, as well as poor economic data.

On Tuesday, the rand gained some support from geopolitical developments as well as positive local manufacturing data for April. Manufacturing production came in far better than expected, jumping 4.6% year-on-year, its highest rise in three years, from 1.3% in March. The improvement was attributed to better electricity supply as load-shedding eased in April.

“If Eskom manages to keep the lights on, or to at least limit future load-shedding to stage one, manufacturing output should improve further off a low base over next three quarters. The pace of recovery will, however, be contained by softer global and domestic demand as well as relatively stagnant commodity prices,” Nedbank Group’s economic unit said in a note. 

Shortly after the JSE closed, the rand had strengthened 0.79% to R14.7085/$, 0.76% to R16.6429/€, and 0.51% to R18.7141/£. The euro was little changed at  $1.1315. 

The benchmark R186 government bond was firmer, with its yield falling eight basis points to 8.325%. Bond yields move inversely to bond prices.

The JSE all share rose 0.49% to 58,767.60 points and the top 40 0.57%. Resources added 1.45% and the platinum index 1.48%.

Among the larger diversified miners, Anglo American gained 2.09% to R385.06, BHP 1.99% to R354.73, and Glencore 1.59% to R50.50. 

Murray & Roberts gained 2.06% to R13.88. The construction company said on Monday that it has appointed PwC as its external auditors, as part of the Independent Regulatory Board for Auditors’ mandatory audit firm rotation requirement.

Naspers fell 0.42% to R3,500. The media company’s online e-commerce payment platform PayU has agreed to acquire Turkish digital payments company Iyzico for $165m, Bloomberg reported.

Retails sales for April are due on Wednesday, with the consensus for year-on-year growth of 1.2%, according to macro-economics website Trading Economics.

Gold was down 0.16% to $1,325.90/oz, after earlier reaching its lowest level in a week, while platinum was up 0.7% to $813.03. Brent crude had gained was a little lower at  $62.25 a barrel. 

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