MARKET WRAP: JSE closes slightly firmer amid surge in US markets

The JSE closed marginally higher on Tuesday with retailers and financials leading the way amid cautious trade as global miners and platinum stocks were among those that declined.

Markets adopted a cautious view towards the historic summit between the US and North Korea as the agreements between US President Donald Trump and North Korean leader Kim Jong-un still lacked some detail.

Volumes traded on the JSE were low for the second consecutive session as the market sought direction from global markets, which traded mostly flat or slightly weaker on the day.

The local market, together with other emerging markets, has been on the back foot for most of May and June as American markets jumped on steady economic growth and better-than-expected company results.

A probable interest-rate hike by the US Federal Reserve on Wednesday has added to the woes of emerging markets.

Allocation to US equities climbed 16 percentage points to a net 1% overweight, the first time investors surveyed have gone overweight in 15 months, Bank of America Merrill Lynch said in the latest fund manager survey for May, released on Tuesday.

According to the survey, 64% of respondents think the US has the most favourable outlook for profits, a 17-year high. All other regions have net-negative profit outlooks.

The most commonly cited tail risk to the markets was identified as a trade war (31%), followed by a hawkish policy mistake by the Fed (26%) and a eurozone/emerging-market debt crisis (23%).

The all share close 0.11% up at 58,207.80 points and the top 40 added 0.14%. Food and drug retailers rose 0.96%, financials 0.41%, and industrials 0.33%. The platinum index shed 1%, resources 0.66%, and property 0.37%.

Anglo American slipped 2.07% to R321.59 and BHP 0.42% to R309.50.

Anheuser-Busch InBev rose 1.6% to R1,291.24.

British American Tobacco lost 0.41% to R653.73, after issuing a trading update earlier. “The group remains on track for another good year of adjusted constant currency earnings growth,” it said.

The rand weakened to R13.2414 to the dollar from R13.1676 at the JSE’s close following higher than expected US consumer inflation data, which practically sealed the likelihood of a US rate hike on Wednesday.

Local bonds were weaker with the benchmark R186 bid at 9.03% from 8.98%. The US 10-year treasury was largely unchanged at 2.963%.

The top 40 Alsi futures index lost 0.09%% to 51,931 points. The number of contracts traded was 25,769 from Monday’s 14,497.