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JSE continues on recovery path

Johannesburg - Confidence returned to world markets on Wednesday as overnight gains in oil prices and a batch of positive economic data from Australia to the United States calmed fears of a global economic slowdown. The JSE was no exception, with share prices and the rand continuing Tuesday’s rally.

With the S&P 500 index reaching an eight-week high on Wednesday and the futures market pointing to further gains, Asian markets rallied to a two-month high on Wednesday morning. European markets also continued Tuesday's rally, with share prices in London the highest in two months.

MSCI's broadest gauge of the world's stock markets also rose to its highest level in almost two months.

Financial shares were among the big movers on the JSE, with resources and industrial shares also trading higher. Banking shares in particular were stronger as the rand firmed even more to R15.57 as fears about a confrontation between President Jacob Zuma and Finance Minister Pravin Gordhan subsided.

News that Barclays PLC wants to sell its stake in Barclays Africa Group [JSE:BGA] has been discounted, and investors are also encouraged by assurances that Barclays’ decision had nothing to with the political situation in South Africa but was made on commercial grounds to cut costs.

READ: Barclays selling Absa to save costs

By mid-morning the All-share index was heading towards 51 000 points and was already 0.93% higher at 50 784 points. The Top 40 index traded above 45 000 points and was 1.18% stronger at 45 146 points.

At that stage the Financial index gained another 1.57% and the Resources index was 1.78% higher. The Industrial index gained 0.62%, but the Gold index lost 6.31% as investors took profits after the metal's incredible run. Before Wednesday’s trade, the Gold index gained more than 97% over the past 90 days.  

Among the biggest losers was Gold Fields [JSE:GFI], which traded 8.39% lower, Harmony [JSE:HAR], which lost 6.75%, and Sibanye [JSE:SGL], which was 6.31% softer.

Analysts said on Wednesday morning that a string of US economic data which beat expectations helped restore some of the lost market confidence.

The Institute for Supply Management's index of US factory activity, a closely watched measure of the American manufacturing sector, rose more than expected last month. It has edged up for two months in a row, appearing to have snapped its almost continuous decline since late 2014.

US construction spending rose to the highest level since October 2007, while solid gross domestic data from Australia and Canada also helped.

Investors are further encouraged by the Chinese central bank’s decision to decrease the cash that Chinese banks must hold, in an effort to release more money into the system.

They also hope for more stimulus in China as economic indicators are still worrisome, as is also the case in Europe where the latest inflation figures were pointing to deflation.

The interest in the banking sector moved to Nedbank [JSE:NED] on Wednesday morning, The banking group said that headline earnings for the 12 months to end-December increased 9.6% to a record R10.8bn. Non-interest revenue rose 7.1% R21.7bn, underpinned by commission and fee income growth of 7.3% to R15.6bn.

The share price responded positively and traded 2.22% higher at R189.88. Barclays Africa gained another 3.96% to R144.40 and Standard Bank [JSE:SBK] was 3.56% higher at R115.86..

FirstRand [JSE:FSR] was among the busiest shares on the JSE on Wednesday morning, and over 165 million shares were traded for more than R3.5bn. The share price was however only 0.84% higher at R46.89.

There was a great deal of interest was in the beer sector as Anheuser-Busch InBev [JSE:ANB] was busy on the corporate scene in preparation for its proposed takeover of SABMiller [JSE:SAB].

The biggest news was that China Resources Beer Holdings agreed to buy out the remaining stake in Snow Breweries, its Chinese joint venture with SABMiller, for $1.6bn. The sale of the stake may help AB InBev secure Chinese antitrust approval for its acquisition of SABMiller. 

It was also announced that Japanese brewer Asahi has offered to buy SABMiller’s Peroni and Grolsch beer brands for R45.35bn.

The news had virtually no influence on SABMiller’s share price, which at mid-morning was only 0.07% higher at R921.80. AB InBev traded 1.32% higher at R1 793.33.

Before Wednesday’s trade the share lost about 10% of its value over the past month, as investors were concerned that the stock was too expensive when it traded in the region of R2 000 shortly after its listing on the JSE at the beginning of the year.

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Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
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