MARKET WRAP: JSE gains as US-China trade deal increases risk sentiment

The JSE tracked global markets higher on Tuesday, boosted by expectations that the US and China are close to signing a partial deal on trade.

Reports that the US is considering lifting some of the tariffs on  Chinese imports bolstered global market sentiment. Reuters said earlier, according to sources familiar with the situation, that China wants this included as part the first phase of a trade deal that is expected to be signed this month.

“If the US does roll back existing tariffs, the positive spillover will extend beyond financial markets as such a move would alleviate the downward pressures on global trade conditions,” said FXTM market analyst Han Tan. “Still, until that keenly awaited ‘phase one’ trade agreement is signed between the world’s two largest economies, investors may continue keeping their exposure to riskier assets in check.” 

Shortly after the JSE closed, the Dow was flat at 27,486.82  points. In Europe, the FTSE 100 was up 0.23%, France’s CAC 40 0.34%, and Germany’s DAX 30 0.1%.

Earlier, the Shanghai Composite rose 0.54%, Hong Kong’s Hang Seng 0.49%, and Japan’s Nikkei 225 1.76%.

The rand recorded its third consecutive session of gains on Tuesday, strengthening to R14.67/$ in intra-day trade. At 5.20pm it had firmed 0.21% to R14.7798/$, 0.67% to R16.3753/€, and 0.26% to R19.0325/£. The euro had weakened 0.45% to $1.1079. 

Gold was down 1.34% to $1,489.21/oz and platinum 0.7% to $929.83. Brent crude added 1.01% to $62.74 a barrel.

Locally, the consumer confidence index (CPI), complied by FNB and the Bureau for Economic Research at Stellenbosch University, dropped to an almost two-year low of -7 points in the third quarter. The median forecast according to Bloomberg was for the index to fall to three basis points from five in the previous quarter.

FNB said the drop in the index was mainly as a result of a reversal in the economic outlook sub-index and a “further deterioration in the time-to-buy durable goods index”. The economic outlook sub-index dropped to -17 points from 11 previously.

The Standard Bank whole-economy purchasing managers’ index (PMI) rose to 49.4 points in October from in 49.2 in September.

Earlier, Moody’s Investors Service downgraded Eskom’s rating further into sub-investment grade saying plans to restructure the power utility would be hard to implement without explicit support from the cabinet, according to Reuters.

The JSE all share gained 0.56% to 57,246.9 points and the top 40 0.61%. Banks rose 1.77% and financials 1.65%, while gold miners slumped 5.55%.

FirstRand added 2.34% to R68.35, Nedbank 2.07% to R238.46, Absa 1.88% to R160.56, and Standard Bank 1.13% to R179.22. 

AngloGold plunged 7.03% to R291.95, Harmony 5.34% to R47.89, Gold Fields 5.16% to R84.22, and Sibanye-Stillwater 3% to R26.87. 

MC Mining jumped 27.31% to R6.20, its biggest one-day gain in almost seven months, after it said on Tuesday that it had been granted a mining right for its Generaal coking and thermal coal project in Limpopo.

Telkom plummeted 7.46% to R62.52. It said on Tuesday that it expects headline and basic earnings per share to decrease by between 30% and 40% in the six months to end-September. The telecoms group said this was as a result of a significant increase in net finance charges.

Naspers gained 0.49% to R2,184.59. The JSE said on Tuesday that it is asking the public for input on a proposal to jointly cap Naspers and Prosus at 10% on its capped indices, to alleviate the potential risks for investors who are tracking them.

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