MARKET WRAP: Risk sentiment picks up as US-Iran tension abates

The JSE ended the day weaker on Wednesday, while the rand recovered as investors kept an eye on events in the Middle East.

While the escalation in US-Iran tension rattled global markets earlier, sentiment began shifting as calm prevailed after US President Donald Trump tweeted that no casualties have been reported after Iran hit US military bases in Iraq. This was followed by Iran’s foreign minister saying that his country is not seeking to escalate the situation but will defend itself against any aggression.

European markets were mixed, while earlier their Asian counterparts were all lower. The Shanghai Composite was down 1.22%, Hong Kong’s Hang Seng 0.83% and Japan’s Nikkei 225 1.57%. In Europe, France’s CAC 40 was up 0.22% and Germany’s DAX 30 0.54%, while the FTSE 100 was down 0.12%.

After having been weaker earlier on Wednesday, the rand recovered some of its losses following an easing in global risk-aversion, with investors slowly returning to riskier assets later in the day.

By 5.30pm, the rand had firmed 0.66% to R14.2189/$, 0.94% to R15.8122/€, and 0.62% to R18.6578/£. The euro weakened 0.27% to $1.1121 

Despite the recovery, the rand was still the worst performing among emerging-market currencies tracked by Bloomberg over the past five days.

Earlier, the gold price topped $1,600/oz for the first time in almost seven years, as investors turned to safer assets following the Iraq attacks.

London Capital Group head of research Jasper Lawler said earlier that the flight to safety by investors had seen gold rise above $1,600/oz for the first time since 2013. If tensions were to “die down between the US and Iran, as we expect they should, then inevitably gold will give back some of its recent gains”.

Gold was last seen down 0.32% to $1,568.23/oz, erasing earlier gains after Iran stressed it was not looking to go to war. Platinum was down 1.77% to $955.95. Brent crude was down 2.28% to $66.80 a barrel.

The JSE all share fell 0.11% to 57,322.3 points and the top 40 0.12%. Platinum miners were up 4.9% and resources 0.4%. Gold miners fell 0.88%, banks were were little changed, and industrials lost 0.5%.

Anglo American Platinum leapt 4.02% to R1,383.41, Northam Platinum 5.74% to R134.37, and Impala Platinum 5.45% to R152.90.

Anglo American gained 0.14% to R401.20. The company is in “advanced discussions” with Sirius Minerals to buy the UK potash mine developer for R7.24bn. This would be the first major acquisition by Anglo since its purchase in 2007 and construction of the Minas Rio iron ore prospect in Brazil for more than $13bn (about R185bn).

Anglo, which is busy building the $5bn Quellaveco copper mine in Peru, confirmed a statement from London-listed Sirius on Wednesday that it was in talks about making a 5.5p per share cash offer for the company, valuing the potential deal at £386m (R7.24bn).

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