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JSE follows world stocks higher despite tech glitch

Johannesburg - Renewed hope of policy easing from the world’s top central banks supported global markets on Monday and the JSE followed enthusiastically.

By midmorning all major indices on the JSE, with the exception of the gold index, were substantially higher.

The news that foreign investors did not buy nearly R100bn South African equities since May, but were rather net sellers of securities to the tune of more than R30bn, did not have an influence on the market or on the rand.

The JSE announced on Sunday, that a programming error caused the trading data for the period between May 31 and July 20 to have been incorrectly calculated.

READ: JSE's R98bn foreign buy blunder

Analysts said the in- and outflows from markets are massively distorted by arbitrage, which occurs when there is the simultaneous buying and selling of securities, currencies, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.

READ: Shapiro on R98bn JSE blunder: Stats don't mean anything

The All-share index was midmorning on Friday 1.13% stronger on 53 602 points and the Top 40-index gained 1.17% to 46 829 points. The financial index was at that stage 1.20% stronger despite the bleak prospects for the South African economy.

The industrial index was 1.18% higher and the resources index gained 0.95%. Both indices included big double listed shares which are also listed in Europe, where markets were also sharply higher on assurances from policymakers on the need to boost growth to quell worries over the impact of Britain's Brexit vote.

Policymakers from the Group of 20 countries agreed at the weekend to work to support global growth and better share the benefits of trade, in a meeting dominated by the impact of Britain's exit from Europe and fears of rising protectionism.

The news on Friday that surveys showed that business activity in Britain had wilted in the wake of the Brexit vote, renewed hopes that the Bank of England will consider support measures for the economy at its next meeting. The bank did not announce any measures at its meeting last week, but left the door open for future action if the economy requires it.

READ: Draghi composed on Brexit as aftershock data awaited

The Bank of Japan is also widely expected to ease policy further at a policy review ending on Friday, while Japanese Prime Minister Shinzo Abe has ordered fiscal stimulus. Investors were encouraged by comments from Bank of Japan Governor Haruhiko Kuroda on the sidelines of the G20 meeting.

Kuroda said he would ease policy further if necessary to achieve its 2% inflation goal, but also said there was no discussion on "helicopter money" - a radical policy of expanding fiscal stimulus financed by printing money.

Investors are also waiting for the US Federal Reserve’s (Fed) open market committee meeting this week. Although the Fed is expected to keep policy unchanged, investors will be looking for clues on policy direction in the statement after the meeting.

The strength of US economic data in recent weeks has revived speculation that the Fed may raise interest rates around the end of year. Futures, which had priced out any chance of a rate hike this year after the UK referendum, are now pricing in about a 40% chance of a 0.25 percentage point increase by the end of the year.

Amongst the heavyweights in the industrial sector Naspers [JSE:NPN] gained 1.64% to R2 273.32 and SABMiller [JSE:SAB] was 0.64% stronger on R835.30.

Richemont [JSE:CFR], which reached a 52 week low of R82.40 last week, continued its recovery on Monday and traded 1.16% higher on R83.94.

Bidcorp [JSE:BID], which fell to a low of R240.50 on 26 June this year, is also recovering and was midmorning another 2.12% stronger on R274.85.

In the resources sector Anglo American [JSE:AGL] was 2.58% higher on R148.03 and BHP Billiton [JSE:BIL] 2.23% stronger on R176.61.

Anglo American Platinum [JSE:AMS] was 0.95% lower midmorning, but was earlier more than 2.5% softer on R385.00 after the company announced that headline earnings per share for the six months ending June slumped 58% to R3.99 a share, despite higher sales. The lower earnings were the result of costs rising faster than revenues.

Arcelor Mittal [JSE:ACL] surprised the market by saying that it may return to profit for the first time since 2010 provided the government introduces more tariffs in the next three months that will protect the continent’s biggest steel producer from cheaper imports.

The share price gained 3.33% to R8.38, although the company will suffer loss in the six months until June within a range of R0.42 to R0.46 a share. This is an improvement on the loss of R21.25 a share reported for the six months ended December 31, because the continent’s biggest producer was able to cut costs and raise prices.

AngloGold Ashanti [JSE:ANG] traded 1.62% lower in line with the rest of the gold index which lost 0.97%, although the company returned to profit in the first half as it benefited from higher bullion prices and weaker currencies in the countries it operates in.

In the financial sector Old Mutual [JSE:OML] traded 1.56% higher on R39.00 and MMI Holdings [JSE:MMI] gained 1.31% to R23.95.

Shoprite [JSE:SHP], which announced strong sales growth last week, set another 52-week high when it gained 2.13% to trade at R203.74, Pick n Pay [JSE:PWK] was also at a high of R79.96, which is 1.87% higher than Friday’s close.


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Rand - Dollar
18.90
+0.2%
Rand - Pound
23.86
+0.2%
Rand - Euro
20.36
+0.3%
Rand - Aus dollar
12.31
+0.3%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
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Brent Crude
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Top 40
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All Share
74,536
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Resource 10
57,251
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Industrial 25
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Financial 15
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