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Johannesburg - The weaker dollar, which pushed global markets sharply lower on Monday but supported commodity prices, making the JSE one of few exchanges where share prices have risen.
Global markets were still jittery over President Donald Trump’s economic policies, as his inauguration speech on Friday did little to put investors' minds at ease over his protectionist policies.
Monday's markets were overshadowed by the weak dollar, which slipped broadly after Trump’s protectionist tone in his inauguration speech, undermining optimism over the US economy spurred by his promises of tax cuts and other stimulus.
But a weaker dollar is good news for commodity prices, as commodities priced in dollars become cheaper for buyers in other currencies, and that supported resources shares on the JSE. By mid-morning the Resources index was already 1.6% up.
A weaker dollar however means a stronger rand, which traded at R13.48 to the dollar, which put a cap on the prices of dual-listed shares on the JSE.
These stocks were also hampered by a dive in the FTSE index in London, where most of the big local dual-listed shares are also listed, in reaction to the softer dollar in line with global markets elsewhere. The Industrial index, which includes most of the big dual-listed shares, was therefore 0.02% down by midday.
Financial shares also made a strong showing on the back of a firmer rand and traded 0.83% up by mid-morning.
The All-share index was 0.60% higher at 52 847 points, while the Top 40 index was 0.56% stronger at 46 037 points.
After a sharp rally following Trump's November election that propelled it 3% higher for the month, the dollar gave up some of those gains against a backdrop of uncertainty surrounding the new president's policies, as well as his recent remarks about the impact of dollar strength.
Trump's first address as president on Friday highlighted his "America first" policies that were short on specific proposals, and disappointed investors hoping for details on his plans to stoke growth, spend on infrastructure and reduce taxes. Trump pledged to end what he called an "American carnage" of rusted factories and vowed to put "America first", laying out two simple rules - buy American and hire American.
The Nikkei index in Japan fell 1.1%, while shares in Australia dropped 0.8% after the Trump administration on its first day in office declared its intention to withdraw from the Trans-Pacific Partnership, a 12-nation trade pact Japan and Australia have also signed up for.
Trump said on Sunday he plans talks soon with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement.
"The market is getting nervous about the possibility that the world's trade might shrink," said Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank in Tokyo.
The star on the local market was Hulamin [JSE:HLM], which makes aluminium products, which gained 12% in early trade to R12.00. The company said it expects full-year headline earnings per share to double after a strong manufacturing performance delivered record sales volumes.
"[Hulamin] rolled products has benefited from consistent investment in operational excellence and risk management to achieve record sales volumes of 214 000 tonnes for the year under review," the company said in a statement.
The company exports two-thirds of its products, mainly to the US, Europe and southern Africa. The rest is used in SA.
The financial performance was achieved despite the stronger rand and relatively stable prices on the London Metal Exchange, it said.
