JSE rises as market favourite Macron wins French poll

(Gianluigi Guercia, AFP)
(Gianluigi Guercia, AFP)

Johannesburg - The JSE followed the rest of the world higher on Monday after the market's favoured candidate won the first round of the French election, reducing the risk of another Brexit-like shock.

European shares opened sharply higher and the euro jumped to five-month peaks.

The stronger euro also supported the rand against the dollar, and the local currency traded as low as R12.90 to the greenback at mid-morning.

At that stage the Financial and Industrial indices on the JSE were higher in line with the stronger European markets, which supported the All-share and Top 40 indices. The All-share index was at stage 0.70% higher at 52 562 points, while the Top 40-index traded 0.68% stronger at 45 810 points.

Resources and gold shares were however lower in response to the stronger rand, with the Gold index again losing more than 6%.

The victory for pro-European Union centrist Emmanuel Macron in the French election, who is now expected to beat right-wing rival Marine Le Pen in a deciding vote next month, sent the European STOXX 50 index up 3% while France's CAC 40 rose almost 4%, with banking shares the big winners. The FTSE index in London was almost 2% higher.

That supported the big dual-listed shares on the JSE, which are also listed in Europe. Most of them are included in the Industrial index which was 0.76% higher despite the stronger rand.

Steinhoff [JSE:SHF],which is also listed in Frankfurt, was the busiest share on the JSE in terms of volume with more than 8 million shares sold for more than R538m. The share price was 3.45% higher at R66.21. Naspers [JSE:NPN] was however 0.85% lower at R2 444.05.

Financial shares on the JSE soared on the back of a strong rand and the Financial index at mid-morning was 1.93% higher, with the Banking index 3.01% higher. Standard Bank at mid-morning was already 3.18% up at R147.70 and FirstRand [JSE:FSR] gained 2.63% to R49.57.

The rand’s strength was the result of a weaker dollar. The dollar not only lost ground against the euro - which gained more than 1% against the currency after the result of the French election - but investors are also nervous about the situation in Korea, where a US aircraft carrier strike group is heading for Korean waters.

The strong rand is negative for resources shares, whose commodities are priced in dollar and receive less in rand if the local currency improves.

The losses in the resources sector were however limited, as the big dual-listed commodity giants traded moderately higher in line with the stronger European markets.

BHP Billiton [JSE:BIL] was 0.51% higher at R202.81 and Glencore [JSE:GLN] gained 0.50% to R50.55. Anglo American [JSE:AGL] was 0.10% lower at R188.37 as its local subsidiaries traded sharply lower. Kumba [JSE:KIO] lost 3.53% to R178.2 and Anglo American Platinum [JSE:AMS] traded 2.13% softer at R335.34.

Impala Platinum [JSE:IMP] was also hurt by the strong rand and lost 3.05% to trade at R44.05.

The gold sector was a bloodbath, with the Gold index dropping 6.05%. Gold Fields [JSE:GFI] lost 7.44% to R47.00, Sibanye [SGL] traded 6.39% softer and AngloGold Ashanti [JSE:ANG] at mid-morning was 6.34% lower at R155.39.

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