MARKET WRAP: JSE reverses course to end Monday lower

After a strong start, the JSE closed lower on Monday, in volatile trade, as trade talks between the world’s two largest economies kicked off.

The all share index rose as much as 1.9% to 53,199 points on Monday morning, a level last seen in November, as the local bourse tracked gains by major indices in Asia and Australia.

In Hong Kong, the Hang Seng index added 0.82%, with Naspers associate Tencent closing 2.3% up.

However, the JSE’s fortunes reversed, with the local bourse slipping to a close of 51,959 points, or 0.47% lower on the day. All major indices, barring platinum and property, closed in the red.

Naspers, which tends to track Tencent, gave up earlier gains to close 1.1% down at R2,821.81.

“The mix of a stronger rand on Monday against the dollar, coupled with US futures pointing toward a lower open on their shores, took its toll on SA equities and the all share index in the late afternoon,” said Jordan Weir, a trader at Citadel.

In the US, the Dow Jones industrial average opened lower before edging higher in choppy trading. Investors are focused on trade talks between the US and China, which started on Monday.

Gold was 0.39% higher at $1,289.41 an ounce shortly after the JSE’s close while platinum was up 0.72% at $824.38. Brent crude had added 1.74% to $58.45 a barrel.

The rand, meanwhile, climbed as much as 0.93% against the dollar to R13.86 — its best level since early December. Against the euro, it improved 0.32% to R15.89, and 0.63% versus the pound to R17.69.

Senior dealer at TreasuryOne Andre Botha said US Federal Reserve chair Jerome Powell’s comments last week that the central bank would be flexible about future monetary policy moves had boosted risk-on sentiment and given emerging-market currencies “a much-needed shot in the arm”.

“This has helped the rand surge below R14,” Botha said.

“US and Chinese officials started their trade negotiations today in the hope of finding a deal … For now, we need to keep our eyes on international developments to see what will happen with our local currency.”

Local bonds also firmed slightly, with the benchmark R186 government bond last bid at 8.78% from 8.79% previously.