Lack of progress in US-China trade war weighs down market optimism

The good times continued to roll for world equity markets on Thursday, as the Dow and S&P continued to post solid gains in the US session.

Asian markets were mixed, with the tech heavy Nikkei and Shanghai CSI 300 easing 0.01% and 0.9% respectively, the Hang Seng and the ASX200 closed the cash session in the black posting gains of 0.26% and 0.38% respectively. 

The markets continue to hold onto the prospects of a FED rate cut next month, however the lack of progress in Sino-US trade war continues to weigh down the new-found optimism. 

The European Central Bank (ECB) President, Mario Draghi, indicated that the governing council of the ECB would hold back on a rate hike as the Eurozone’s economy begins to feel the effects of the China-US trade war.

The Euro advanced against the dollar after the announcement as carry trade players sought to take positions in the Euro with an anticipation of a widening interest rate differential between the US and the Euro zone within the next month.

The ECB appeared reluctant to increase rates as peripheral European economies still require additional support to navigate the current depressed economy.

On the local front, President Ramaphosa on Wednesday met with executives from 20 state-owned entities, including Eskom and South African Airways, to reassure them of the shareholder's support and address their concerns.

Eskom and SAA continue to be the largest dependents of state funding and are the government's achilles heel in the effort to overhaul the economy. The rand hedges continued to hold their ground on Thursday, with miners making significant headway. 

Blue Label Telecoms [JSE:BLU] advanced 4.3% on the day to trade at 461c, ArcelorMittal [JSE:ACL], British American Tobacco [JSE:BTI], and Harmony Gold [JSE:HAR], advanced 3.77%, 3.51%, 3.12% respectively. The worst performing shares on the day were Sappi [JSE:SAP],  which eased 7.43% to trade at 5442c at the close of business.  Significant losses were recorded by Stadio [JSE:SDO],  Tongaat Hulett [JSE:TON], and Rhodes Foods [JSE:RFG], which shed 6.87%, 6.64% and 5.77% respectively.

The JSE All-Share index closed 1.01% firmer whilst the JSE Top-40 index gained 1.04%. The Resource index rallied once more advancing 1.53%, the Industrials were firmer inching up 1.06% whilst the Financials only managed a 0.41% gain.

The dollar continued to weaken against the majors, which gave the commodities some short-term relief.

At 17.00 CAT, Palladium was 1.18% firmer to trade at $1342/Oz, Platinum was also firmer adding 0.09% to trade at $803.10/Oz with Gold continuing its winning streak to trade 0.57% firmer to trade at $1340.75/Oz.

Brent crude continued to slide today dipping below the $60/barrel level to trade at $59.97.

The dark cloud hovering over the rand is not disappearing anytime soon. The local unit continued to weaken against the dollar reaching a session low of 15.00.

At 17:00 CAT the Rand was trading at R14.99 against the USD, R16.90 to the Euro and R19.05 to the Pound Sterling. 

Brent Crude
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Top 40
Financial 15
Industrial 25
Resource 10
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