MARKET WRAP: JSE gains while rand falls through R15/$

The JSE closed higher on Wednesday while the rand slumped through R15/$ as Eskom’s troubles and the protracted US-China trade war led investors to move away from SA assets. 

The local currency weakened to as low as R15.18/$ — its worst level in almost a year — after Moody’s Investors Service warned on Tuesday that Eskom needed a turnaround plan. The market has been closely watching Moody’s comments on SA’s fiscus and Eskom as it is the only credit-ratings agency that has not downgraded SA below investment grade.

Shortly, after the JSE closed, the rand had weakened 0.96% to R15.0679, 1.19% to R16.9216/€, and 0.9% to R18.3245/£. The euro had firmed 0.22% to $1.1228.

The benchmark government 10-year bond was weaker, with its yield rising 1.5 basis points, or 0.015 percentage points, to 8.38%. Bonds yields move inversely to bond prices.

By 6pm, gold had gained 2.19% to $1,506.45/oz — its best level in six years as investors shied away from riskier assets on worries about the continuing US-China trade war. Platinum was 1.87% higher at $866.58.

Brent crude slumped 3.82% to $56.36 a barrel. 

At the same time the Dow had fallen 1.26% to 25,700.79 points. Europe’s markets had come off their earlier highs, with the FTSE 100 having gained 0.38%, France’s CAC 40 0.61%, and Germany’s DAX 30 0.71%.

The JSE all share rose 0.3% to 55,225.30 points and the top 40 0.29%. Gold miners jumped 4.45% while banks dropped 1.36%.

AngloGold Ashanti gained 4.78% to R320.01, Gold Fields 4.29% to R90.85, and Harmony 4.16% to R44.79.

FirstRand fell 1.86% to R58.45, Nedbank 1.7% to R224.08, Absa 1.25% to R150.59 and Standard Bank 0.82% to R170.99. 

Italtile closed flat at R13 after the company said on Wednesday that it expects its headline earnings per share (HEPS) to increase by between 6% and 8% for the full-year ended June.  

Glencore fell 2.19% to R41.14 after the diversified miner earlier reported that its earnings before interest, tax, depreciation and amortisation dropped 32% to $5.5bn in the six months to end-June.

Mpact jumped 8.21% to R20 after the packaging manufacturer said on Wednesday that its revenue rose 4.2% to R5.2bn for the six months ended June.   

Distell fell 1.08% to R127.82 after the beverage company said on Wednesday that its HEPS are expected to decrease by between 1% and 6% for the full-year ended June. 

The SA Chamber of Commerce and Industry’s business confidence index fell to 92 points in July from 93.3 in the previous month, lower than the Bloomberg consensus of 93. 

On Thursday, Statistics SA is scheduled to publish mining and manufacturing production activity for June. A contraction of 2.2% for mining production, from a fall of 1.5% in May, and an expansion of 1.6% year-on-year for manufacturing from 1% the previous month is the consensus, according to Bloomberg polls.

[email protected]