MARKET WRAP: JSE does an about-turn, clawing back some of its recent losses

The JSE all share reversed course on Thursday to close firmer as risk-on sentiment improved after the European Central Bank (ECB) re-affirmed its stimulatory policies, for now.

The ECB reiterated its stand that interest rates are not set to rise until the summer of 2019, despite an expected economic slowdown in the eurozone over the next few months.

The Dow had gained more than 1% by the JSE’s close with European markets also in positive territory. 

Oanda analyst Craig Erlam said the ECB has taken a very cautious approach amid the slowdown the economy has experienced. “It wouldn’t be outrageous to assume that it won’t take too much for them to delay that first rate hike beyond the latter part of next summer.”

The VIX global volatility index has doubled this month with the Dow slipping into the red for the year on Wednesday.

Investors have been grappling with a range of uncertainties this month, including rising interest rates, concerns that earnings of US companies might have peaked, and the possibility that rising trade tension has weakened Chinese and global economic growth, Dow Jones Newswires reported. This month, the International Monetary Fund (IMF) lowered its forecasts for global growth this year and 2019, partly due to trade protectionism.

The all share closed 1.47% higher at 51,624.90 points and the top 40 gained 1.67%. Banks rose 2.95%, food and drug retailers 2.14%, industrials 1.74%, financials 1.69%, general retailers 0.95% and resources 0.84%. The gold index lost 0.8%.

AB InBev tumbled 10.59% to R1,073 on a disappointing trading update but British American Tobacco (BAT) gained 1.63% to R671.09.

FirstRand jumped 4.91% to R63.84. Naspers added 2.74% to R2,645.57.

Retailer Woolworths rose 2.04% to R49.08 and Shoprite 0.53% to R188.50.

The rand held up relatively well on the day despite renewed dollar strength. The euro was weaker amid a slowdown in Germany’s manufacturing sector as seen in business surveys. “This indicates a high level of uncertainty about the prospects of export-focused industries in Germany,” Barclays Research analysts said.

The euro was last seen at $1.1369 from $1.1391.

Brent crude edged up 0.88% to $76.30 a barrel, but the gold price slipped 0.4% to $1,228.72 an ounce on the stronger dollar.

Local bond yields remained at elevated levels after finance minister Tito Mboweni’s medium-term budget policy statement (MTBPS) on Wednesday revealed a growing debt burden within state finances. The budget deficit is set to rise above 4% of GDP.

The R186 was bid at 9.385% from 9.31% soon after the JSE’s close and the US 10-year treasury at 3.1305% from 3.1022%.

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Source: businesslive.co.za