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Johannesburg - Investors on the JSE latched on to positive international news on Friday morning, which gave global markets a boost as the State of the Nation Address (SONA) on Thursday evening was again a non-event in terms of policy.
With Wall Street at record highs, Asian shares the highest in 18 months and European markets opening strongly, the JSE was almost 1% up by mid-morning with most of the major indices also higher. The market was however off its earlier levels.
SONA had no influence as President Jacob Zuma’s speech did not inspire and was full of ideology, with very few concrete proposals to implement his rhetoric of drastic economic transformation.
The market’s reaction was best illustrated by the movements in the rand, which was firmer at R13.38 to the dollar after a temporary drop on Thursday evening while members of the Economic Freedom Fighters were again forcefully removed from the National Assembly.
By mid-morning the All-share index was 0.87% higher at 52 261 points, while the Top 40 index traded 0.88% stronger at 45 409 points.
The best performer was the Financial index which gained 1.5% in morning trade, as fears of a Cabinet reshuffle in which Finance Minister Pravin Gorhan will be replaced seem to have disappeared for now.
The Industrial index, which includes most of the big dual-listed shares, followed international markets and at mid-morning traded 0.70% higher. The international markets were on a run after US President Donald Trump promised to unveil a major tax announcement to lower the burden on businesses.
Resources shares, which traded 0.73% higher by mid-morning, were also supported by upbeat Chinese trade data. China's strong trade "is related to the global pick-up in growth in the U.S., Europe and also emerging economies," said Jianguang Shen, chief economist at Mizuho Securities in Hong Kong.
China's January exports rose 7.9% from a year earlier, while imports jumped 16.7%, beating expectations and getting the economy off to a strong start in 2017 even as Asia braces for a rise in US protectionism under Trump.
China is the biggest consumer of commodities and any sign of growth is therefore good news for the resources shares listed on the JSE.
Better news about the US economy also supported the dollar, which hurt the gold price. The Gold index at mid-morning was more than 3% lower after the gold price dropped 1.31% to $1 225.70 per ounce.
The good news from China was particularly helpful for Kumba’s [JSE:KIO] share price, which jumped more than 7.6% in early trade to R212.57. By mid-morning the share was still 5.03% higher at R207.11. Kumba gained more than 500% last year but the stock is still rising. Before Friday’s trade it was 23% higher over the past 30 days and 65% over the past 90 days. Assore [JSE:ASR], the other iron ore producer, was 3.77% stronger at R269.79.
Anglo American [JSE:AGL], Kumba’s holding company, was the top performer among the big commodity conglomerates and traded 3.10% higher at R222.96. BHP Billiton [JSE:BIL] was at that stage 1.56% up and Glencore [JSE:GLN] 2.19% firmer at R52.89.
FirstRand [JSE:FSR] was the busiest share in the financial sector and traded 1.73% higher at R50.66. Barclays Africa [JSE:BGA] gained 1.2% to R50.66. African Phoenix [JSE:AXL] is still in high demand and the share lifted 4.35% to 48c.
Standard & Poor's said on Thursday that the banking sector can expect better conditions this year due to stronger economic growth and the possibility that interest rates will not rise further.
Sanlam [JSE:SLM] traded a solid 2.47% higher at R64.35 and there was strong demand for Coronation Fund Managers [JSE:CML], which gained 1.51% to R63.95. Old Mutual [JSE:OML] firmed 1.18% to R35.05.
Naspers [JSE:NPN], the biggest share in the industrial sector which will also stands to benefit from a strong Chinese economy, traded 0.88% higher at R2 160.90.
