MARKET WRAP: JSE gains as comments over a US-China trade deal lift sentiment

The JSE tracked global markets higher on Monday on optimism about trade and expectations that the US Federal Reserve will cut interest rates boosted sentiment.

US President Donald Trump said on Monday that the US may sign a big portion of the trade deal with China ahead of schedule, Reuters reported.

This follows comments by China’s commerce ministry at the weekend that both the US and China had agreed to properly address core issues.

Investors are also expecting the Fed to lower interest rates by 25 basis points on Wednesday, its third cut in 2019, amid concerns about slowing global economic growth.

The medium-term budget policy statement (MTBPS) will be in focus later this week as investors wait for more clarity regarding SA’s finances, including plans for Eskom.

Old Mutual Investment Group chief economist Johann Els said he expects the deficit in the current fiscal year to be much higher, at between 5.8% and 6%, compared with February’s budget target of 4.5%.

“This is against a backdrop of weak economic growth with lower nominal GDP and the negative impact on tax revenues, as well as the additional spending on SOEs since the February budget — mainly the extra R59bn for Eskom — but also on other SOEs. Therefore a bigger deficit shouldn’t come as a surprise to the market and it is largely already priced into expectations.”

At 5.20pm, the rand had strengthened 0.41% to R14.5528/$ and 0.38% to R16.1367/€, while it was flat at R18.7257/£. The euro was little changed at $1.1088.

Gold was down 0.79% to $1,492.61/oz and platinum 0.1% to $920.25. Brent crude lost 0.55% to $61.62 a barrel.

The Dow was up 0.40% to 26,065.03 points, while in Europe the FTSE 100 added 0.13%, France’s CAC 40 0.27% and Germany’s DAX 0.51%.

Earlier, the Shanghai Composite rose 0.85%, Hong Kong’s Hang Seng 0.84% and Japan’s Nikkei 225 0.3%. 

The JSE all share gained 1.12% to 55,762 points and the top 40 1.35%. Banks gained 1.65% and resources 1.51%. The gold index slumped 4.12%.

Sasol gained 11.78% to R298.74, its biggest one-day gain since 2008, after the company announced on Monday that its joint CEOs Bongani Nqwababa and Stephen Cornell will step down from October 31.

The energy and chemical company said its core headline earnings per share (HEPS) increased 5% to R38.13 in the year to end-September.

Famous Brands fell 2.76% to R79.35. The company said on Monday that its HEPS fell by 15% to R1.59 in the six months to end-August.

Astral Foods rose 0.66% to R163.08. This despite the poultry processing group saying earlier that it expects HEPS to decrease by 50% to 60% to between R14.85 and R18.56 in the year to end-September.

DRDGold dropped 4.17% to R6.90. It said on Monday that its cash and cash equivalents increased to R333.6m in the quarter to end-September from R279.5m in the previous quarter.

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