MARKET WRAP: JSE sharply higher as EU deal boosts risk-on trade

The JSE recorded one of its best performances so far this year on Friday as the volatile market jumped more than 3% to end a choppy weak on a high note.

Risk-on sentiment drove banks more than 4% higher, while industrials rocketed on Naspers, which ended the day more than 6% firmer.

Platinum stocks rose 6%, with property shares recovering more than 2%. The market appeared unfazed by disappointing local data indicating a subdued economy, and instead followed global developments.

Risk-on trade gripped global markets, which have been under pressure for most of the month on concern over a global trade war due to US President Donald Trump’s alternating hard- and soft-line approaches towards China.

An EU deal on migrants was the catalyst for the market rebound, with the Dow 1.1% higher at the JSE’s close while the FTSE 100 had risen 0.65% and the DAX 30 1.4%. The deal followed intensive negotiations among EU member countries, with the group agreeing to set up new “controlled centres” for asylum seekers and redistributing the migrants across the entire EU on a voluntary basis.

German Chancellor Angela Merkel has been under pressure in her coalition government to come back from Brussels with a plan to address the migrant issue in a decisive manner.

The euro firmed against the dollar in response, with the common currency also supported by upbeat economic data as consumer inflation rose 2% in June, up from 1.9% in May. This meant consumer inflation was now roughly at the European Central Bank’s (ECB) target of 2%.

Locally, SA’s trade surplus was less than expected at R3.52bn in May, well below consensus forecasts of between R5.8bn and R5.9bn.

Growth in private-sector credit extension also disappointed, coming in at 4.6% year-on-year in May from 5.1% the previous month.

The all share closed 3.25% higher at 57,611 points and the top 40 rose 3.49%. The platinum index gained 6.02%, banks 4.65%, industrials 3.66%, the gold index 3.5%, and food and drug retailers 2.81%. The all share ended the week 1.33% higher.

Anglo American was up 3.89% to R307.43, while Naspers leapt 6.52% to R3,485.

The rand was marginally firmer at R13.6944 to the dollar from Thursday’s R13.7688, while the R186 was bid at 8.860% from 8.925%.

The top 40 Alsi futures index gained 3.57% to 51,740 points. It ended the week 1.58% higher. The number of contracts traded was 27,901 from Thursday’s 26,163.