JSE rises on positive global market trends

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

Johannesburg - The positive mood on world markets continued and the JSE followed suit, despite a rampant rand which improved by 1% against the dollar.

With Wall Street on record highs, Asian shares the strongest in a month and the FTSE Index in London opening sharply higher, it was no surprise that the All-share index was almost 1% firmer in early trade, heading back towards the 50 000 level.

Wall Street is rallying on expectations that president-elect Donald Trump will eventually deliver on fiscal stimulus for the US economy, despite the possibility of an early hike in US interest rates.

Share prices, particularly in Europe, are also supported by expectations that the European Central Bank will extend its stimulus campaign at a policy meeting later in the session. The bond price rally is pushing yields down to the advantage of shares.

Risk appetite received an extra boost when China reported upbeat trade figures, with exports and imports both beating forecasts. Analysts said the improvement reflects a strengthening in global demand, with recent business surveys suggesting developed economies are on track to end the year on a strong note.

Good news for South Africa is that resource imports were strong, a major reason for the sharp gain in bulk commodity prices.

Local sentiment was also boosted by news that business confidence in South Africa rose to its highest in four months in November, helped by improvements in new vehicle sales and manufacturing output. The South African Chamber of Commerce and Industry’s monthly business confidence index rose to 93.9 in November, its highest reading since August, from 93.0 in October.

By mid-morning the All-share index was 0.70% higher at 49 859 points, while the Top 40 index had gained 0.80% to 43 270 points. The star performer was the Industrial index, which traded 1.01% stronger despite the recovering rand which gained 0.98% to R13.51 to the dollar. The Financial index was 1% higher on the back of a rally in European banking shares.

The rand did however put a damper on resources shares, which responded very moderately to the good news about China. The Resources index was at that stage only 0.30% higher, with the Gold index 0.11% up.

Commodities - including iron ore and coking coal - held recent hefty gains as Chinese demand drove steel prices to their highest since April 2014. China's imports of iron ore, crude oil, coal, soybeans and copper all surged in November, customs data showed.

Anglo American [JSE:AGL] was however only 0.64% higher at R211.85 and BHP Billiton [JSE:BIL] traded 0.31% lower at R231.08. Glencore [JSE:GLN] gained 0.92% to R50.80, just below the 52-week high of R50.92.

Naspers [JSE:NPN], which is trading at the lowest levels since May this year, recovered somewhat on the good news about the Chinese economy, as its biggest investment is a 34% stake in Chinese internet giant Tencent. By mid-morning the share was 1.23% higher at R1 960.06.

There was again much interest in the retail sector, after international giant Steinhoff [JSE:SHF] traded more than 5% higher on Wednesday on the back of solid third-quarter results. Steinhoff earns 93% of its income from retail, of which 61% is earned in Europe and 32% in Africa, mainly South Africa.

Steinhoff was 4.2% up at R72.95 and was again the busiest share on the JSE. There are also rumours about a possible tie-up with Shoprite [JSE:SHP], but Steinhoff CEO Markus Jooste did not want to comment on this. Shoprite traded 1.77% higher at R191.76.

Other retail shares were also higher, after heavy losses over the previous three months. Mr. Price [JSE:MRP], which before Thursday’s trade lost 31.6% over the previous 90 days, gained 3.13% to R154.70. Woolworths [JSE:WHL] gained 2.01% to R65.41 after it shed more than 26% over the previous 30 days.

FirstRand [JSE:FSR] traded at a new 52-week high in the financial sector when the share firmed 0.77% to R52.40, having gained more than 12% over the previous 30 days. Standard Bank [JSE:SBK] was 1.70% stronger at R150.00.

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