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Johannesburg - With European markets at a month-high on Monday morning, the Industrial index on the JSE continued to pull the market higher. The JSE is already at the highest level this year.
READ: Europe stocks little changed, investors mull US rate hike
The Industrial index is closely linked to European markets as the biggest shares on the JSE are also listed in Europe, most of which belong to the Industrial index.
In early trade the index was almost 1% higher, but the market lost momentum at mid-morning, when it was only 0.40% stronger. It was however still the only index gaining ground on Monday morning, as most of the others were lower, with the Resources index almost unchanged.
These dual-listed shares represent about 65% of the JSE’s market capitalisation which, according to analysts, is why the JSE is still gaining ground despite South Africa's poor economic prospects. These companies have business interests around the world and do not have any significant exposure to the South African economy.
By mid-morning the All-share index was 0.24% higher at 54 236 points and the Top 40 index traded 0.27% stronger at 48 201 points. The All-share index is now less than 220 points short of the 52-week high of 54 608 points, and less than 1 000 points below the all-time high of 55 188 points reached in April last year.
This is mostly due to the Industrial index, which at mid-morning traded at 74 003 points. This is about 3% higher than the level of 71 755 points reached on December 31 last year, and more than 10% higher than the lowest point of 66 571 points reached in February 2016.
The Resources index gained 0.02% thanks to the big dual-listed mining shares listed in London, but gold shares lost 2.54% as precious metal prices fell even further on the back of a strong dollar. The greenback reached a two-month peak after Federal Reserve chair Janet Yellen suggested that an interest rate hike in the United States may be around the corner.
Yellen said on Friday the Fed should raise rates "in the coming months" if growth picks up and the labour market continues to improve. St Louis Fed president James Bullard said on Monday that global markets appear to be "well-prepared" for a summer rate hike, although he did not specify a date for the policy move.
The probability of a rate increase at the Federal Open Market Committee's June 14-15 meeting rose to around 34% from 26% on Thursday, according to CME's Fedwatch programme.
The stronger dollar also hit the rand, which lost about 0.60% to trade at R15.79 to the dollar. As a result, financial shares lost 0.08%.
Most of the attention on Monday was on Bid Corp - all the lucrative overseas food businesses in the Bidvest [JSE:BVT] stable - which was unbundled and listed separately on Monday morning. Bidvest and Bid Corp were the two busiest shares on the JSE in terms of volume and value.
READ: Boost for Bidvest as Bid Corp lists on JSE
More than 3.5 million shares in Bidvest were traded for more than R405m and more than 1.65 million shares in Bid Corp changed hands in transactions of more than R448m.
Investors seemed to like the transaction. The combined value of the two separately listed shares was much higher than Bidvest's closing price on Friday.
Bid Corp opened at R270 on Monday morning and Bidvest at R120, which means the two shares were worth R392 compared to the R370.33 Bidvest closed at on Friday afternoon. Bid Corp gained R1.00 to trade at R271 at mid-morning, while Bidvest was at that stage lower at R115.55.
Anheuser-Busch InBev [JSE:ANB], the world’s biggest brewer and the biggest share on the JSE, traded 0.88% higher at R1 996.72. The European Union gave the go-ahead last week for the company’s proposed takeover of SABMiller [JSE:SAB] and later in the week, the South African Reserve Bank did the same. SABMiller gained 0.47% to R986 - just below the all-time high of R987.10.
British American Tobacco [JSE:BTI] was also just below its all-time high of R962.81, with the share trading 0.15% up at R962.01. Richemont [JSE:CFR] was 1.13% stronger at R93.84.
