MARKET WRAP: JSE gains 1% as some heavyweights rally

The JSE climbed 1% in broad-based gains on Tuesday, in line with its European counterparts, as investors appeared to brush off a host of looming risk events.

Gold miners and banks fared best, with the gold price reaching a seven-month high. Investor interest in safe-haven assets, as well as signs of longer than expected monetary stimulus in the US continues to boost gold, which is seen as a hedge against inflation.

The all share rose 1.15% to 54,387.7 points and the top 40 lifted 1.26%. Banks gained 1.73%, gold miners 1.89% and property stocks 1.66%.

Corporate news was light, but Absa jumped 6.08% to R186.28. Earlier, it announced long-serving group CEO Maria Ramos would retire at the end of February.

British American Tobacco surged 5.95% to R449.42. Earlier, US stock brokerage Piper Jaffray upgraded its rating of the stock from “neutral to overweight”. Reinet, which has a sizeable holding in the company, added 4.21% to R201.41.

Dovish commentary by US Federal Reserve officials and signs of progress in the US-China trade negotiations helped prompt a broad-based rally in global equities in January, but events this week pose a threat to this risk-on sentiment.

The first US Federal Reserve monetary policy decision is due on Wednesday, the same day US and Chinese officials will resume their trade negotiations. The talks will take place as a litany of new criminal charges are levelled against Chinese telecom giant Huawei. This has already drawn sharp words from Beijing, putting pressure, earlier, on Asian markets.

Local factors are expected to take a back seat, although the future of Eskom is on the agenda as the cabinet meets on Wednesday.

Market focus on Tuesday will be on London, where MPs will vote on UK Prime Minister Theresa May’s amended Brexit agreement. The vote, expected to begin at 9pm South African time, could prompt volatility in the pound.