MARKET WRAP: JSE led higher by banks and retailers

The JSE rose along with most global equity markets on Monday, receiving a boost from news at the weekend that the US will not impose tariffs on Mexico over the lack of security at their mutual border.

This lifted risk assets, with Hong Kong’s Hang Seng earlier rising 2.27%, although commodity prices were under some pressure, with gold miners faring worst. The latter often benefit from investors’ interest in safe-haven assets.

The all share gained 0.66% to 58,481.1 points and the top 40 rose 0.73%. Banks added 2.05% and general retailers 2.77%.

Gold miners lost 3.77% and the platinum index 2.25%.

The rand also benefited from the buoyant global markets, and was 0.83% firmer at R14.7812/$ as the JSE closed. This provided the boost to banking shares. Earlier, ratings agency Moody’s Investors Service said even though SA’s weak economic growth in 2019 should put pressure on banks, the effect on the sector should be manageable.

“Banks are already competing for better-quality borrowers, and revenue is under pressure amid competition from new entrants and widespread migration to mobile and digital platforms by established players,” Moody’s lead sovereign credit analyst for SA, Lucie Villa, said on Monday.

Despite this, SA’s banks have diversified revenue streams, which should help support profitability, Villa said. At a group level, Standard Bank and Absa derived 20%-30% of earnings in Sub-Saharan Africa.

There was also some corporate news on Monday, although much of it had no effect on the JSE.

Tongaat’s shares were suspended on Monday, at the request of the company, as it grapples with the fallout from an accounting scandal. At the time of the suspension, 3.08pm, its shares had fallen 5.31% to R13.21. This was 94% lower than its record high, reached in September 2014.

Trading in Lonmin’s shares were also suspended, due to its takeover by Sibanye-Stillwater. Lonmin’s last share price was R14.80, with it having gained 76.4% in 2019. Sibanye-Stillwater relinquished 1.69% to R14.58.

Rand-hedge Richemont fell 1.04% to R117.51.

Naspers rose 1.59% to R3,514.90, after Hong Kong-listed subsidiary Tencent climbed 3.45% earlier.  

Woolworths gained 4.76% to R48.40, after the retailer announced that the former CEO of Richemont’s Alfred Dunhill unit, Christopher Colfer, had been appointed as an independent nonexecutive director.

Nepi Rockcastle added 0.79% to R127. The property group said on Monday that its ordinary shares would trade on the A2X from June 18.

There was no local data on Monday, but the week is a busy one. Manufacturing data is due on Tuesday, retail sales numbers on Wednesday and mining production figures on Thursday. All of these releases are for April, the first month of the second quarter.

Shortly after the JSE closed, the Dow was up 0.64% to 26,148.51 points, while in Europe, the FTSE 100 had gained 0.59% and the CAC 40 0.25%. German markets were closed for a holiday on Monday.

Gold was down 0.83% at $1,329.13/oz and platinum 0.12% to $808.52. Brent crude was flat at $63.29 a barrel.

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