The JSE pushed higher on Monday, bolstered by a strong showing by market heavyweight Naspers, while banks and gold miners were under pressure.
Naspers climbed a healthy 3.34% to R3,164.85, tracking gains in Hong Kong associate Tencent. Most indices spent much of the day flat, with US markets closed for a public holiday, thereby reducing activity.
Corporate news and economic data also provided the market with little direction.
The rand was at roughly the same level it ended last week, but the oil price gained strongly at the weekend, pushing to a six-week high. That followed reports of stronger than expected Chinese import demand.
The all share gained 0.76% to 54,139.1 points, and the top 40 0.95%. Industrials added 1.56%, while gold miners lost 1.66%.
Earlier, data showed the Chinese economy grew at its slowest pace in 28 years in 2018, underlining the cost of its trade war with the US, and a need for government stimulus.
Sentiment was boosted by reports suggesting that China had formulated a plan to reduce its trade deficit with the US over the next six years, further adding to hopes an agreement between the world’s two largest economies was in the offing.
Wednesday’s consumer inflation data is the main local feature this week, and will be of particular relevance after the Reserve Bank adopted a somewhat dovish tone at its monetary policy announcement last week.
The market has priced in 10% chance of an interest rate increase in the next six months, and a 50% chance in 2019, Nedbank Corporate and Investment Banking analysts said. There was a risk the market was being a little too dovish.
The Reserve Bank’s current stance, which forecasts one interest-rate increase over the next two years, was positive for fixed-income assets, which were already attractive at current levels, said Old Mutual Multi Managers strategists Dave Mohr and Izak Odendaal. “Long-term inflation should trend lower and the risk of short-term rate hikes has diminished.”
This, however, raised the question of whether the South African market was entering a low-return environment, the strategists said.
On the JSE, rand hedge British American Tobacco gained 2.5% to R459.98, Richemont 1.91% to R96.34 and AB InBev 0.37% to R1,013.70.
TFG gave up 2.51% to R169.33, while Mr Price added 1% to R211.05.
Shoprite fell 2.14% to R186 and Vodacom 2.17% to R130.11.
Exxaro gained 4.57% to R149.61.
Diversified miner BHP fell 0.61% to R287.95 and Glencore 0.51% to R53.01.
Shortly after the JSE closed the FTSE 100 was flat, while the CAC 40 had fallen 0.29% and the DAX 30 0.57%.
Platinum had given up 0.4% to $796.12/oz, while gold was flat at $1,280.02. Brent crude was 0.51% higher at $62.81 a barrel.