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Financial stocks rise as JSE rallies

Johannesburg - Share prices on the JSE rallied on Friday in line with global markets, after a week of losses as investors worldwide anxiously await the latest US Labour market report to be published later in the day.

Economists expect solid growth in new jobs in the US, but the consensus seems to be that it will not be strong enough to warrant a hike in US interest rates as soon the next meeting of the Federal Reserve’s open market committee next month, but rather in December.  

An increase in US interest rates can have a serious effect on a market like South Africa, as it could revert some of the investments in emerging markets where yields are far more attractive back to the US, perceived to have lower risk.

Economists surveyed by Reuters expect US nonfarm payrolls increased by 180 000 jobs last month, in line with this year's monthly average job growth. The unemployment rate is expected to fall one-tenth of a percentage point to 4.8%.

This is lower than the hefty gains of the previous two months, but probably still strong enough to push the Federal Reserve to raise interest rates later this year. It would however give them more leeway to postpone it until the end of the year.

"It would lead people to the conclusion that the economy is continuing to grow at a moderate pace and to expect a December rate hike from the Fed rather than September," said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management in Washington.

The rand also stabilised somewhat on Friday morning, putting local investors more at ease as they pursue buying opportunities after a week of losses. There were no new developments in the ongoing saga between Finance Minister Pravin Gordhan and the Hawks as Deputy President Cyril Ramaphosa promised in Parliament that the crisis will be dealt with.

READ: Rand retreats as focus shifts to US jobs report

The All-share index at mid-morning on Friday was back above 53 000 points and traded 0.82% higher at 53 061 points, with the Top 40 index 0.89% stronger at 46 579 points.

The top performer on Friday was financial shares, which lost almost 3% over the previous seven days. By mid-morning the Financial 15 index traded 1.52% higher on the back of a stronger rand which traded at R14.60 to the dollar, almost 0.70% higher than the previous day’s close at R14.72.

The busiest shares were Standard Bank [JSE:SBK], which gained 2.66% to R133.70, and FirstRand [JSE:FSR] which was 1.22% stronger at R44.00. Old Mutual [JSE:OML] traded 1.35% higher at R37.55.

The Industrial index was a solid 0.87% firmer, backed by higher shares prices in London, and the Resources index gained 0.32%. The only loser was the Gold index, which gave up 1.32% after losing almost 13% over the previous seven days.

Naspers [JSE:NPN] continued to storm ahead from one all-time high to the next, and at mid-morning was at another intraday high of R2 445.32 compared to the previous record of R2 431.61.

British American Tobacco [JSE:BTI] also performed strongly and gained 1.91% to R933.06.

Investors continued to pour money into retail shares, despite the big sell-off of Mr Price [JSE:MRP] which lost more than 23% over the previous two days after a disappointing trading update of the past 18 weeks. The stock was 0.55% lower at R167.58.

Clicks [JSE:CLS], The Foschini Group [JSE:TFG] and Woolworths [JSE:WHL] were among the busiest shares on the JSE on Friday morning and all traded solidly higher. Clicks gained 2.06% to R120.43 and TFG was 1.92% up at R133.52. Woolworths traded 1.62% stronger at R80.79.

International furniture retailer Steinhoff [JSE:SHF], which is also listed on the Frankfurt stock exchange, was 1.87% higher at R87.39.

Impala Platinum [JSE:IMP], which traded more than 10% higher on Thursday after a strong operational report in its annual results, gained 3.61% on Friday morning to R64.07.  

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Rand - Dollar
18.93
+0.0%
Rand - Pound
23.90
+0.0%
Rand - Euro
20.40
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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