MARKET WRAP: JSE reverses losses as dollar weakens

The JSE rallied on Friday as the rand strengthened against the dollar, which  was hit by mounting trade tension and prospects of lower global growth.

On Thursday, US commerce secretary Wilbur Ross said that the US and China were “miles and miles” from resolving trade issues. Trade tension between the world’s two largest economies have spooked investors in recent weeks.

The all share gained 0.77% to 54,050.2 points and the top 40 rose 0.88%. While banks added 2.51%, gold miners 1.95 and general retailers 0.58%, industrials fell 0.16%.

The government shutdown in the US has been going for more than a month — the longest on record. The US has also been dealt a blow as global growth concerns rose this week after China reported its weakest growth in three decades, and the International Monetary Fund downgraded its forecasts for the global economy for 2018 and 2019

On Thursday, European Central Bank president Mario Draghi acknowledged that the outlook for the eurozone economy had deteriorated since December and that the Bank might have to keep monetary policy loose. Draghi is expected to deliver another address on Monday evening.

“The global economy is expected to moderate in 2019, but the environment could be constructive for emerging markets. The three central global policy triggers relevant for emerging markets, namely Fed policy, China’s policy response to its growth slowdown and the US-China trade spat, are currently all turning more favourable,” NKC African Economics economist Elize Kruger said.

Meanwhile, the Sun reported that Northern Ireland’s Democratic Unionist Party had privately decided to offer conditional backing for Prime Minister Theresa May’s Brexit deal next week, which saw the pound strengthen. The parliamentary vote will take place at 9pm South African time on Tuesday.

Locally, the producer price index is expected to moderate next week while the trade balance is likely to show a surplus in December.

Fast-moving consumer goods group AVI was down 8.68% to R95.45 after it warned shareholders on Friday morning that its interim sales were flat and its headline earnings would fall up to 7%.