Publications
Partners
Johannesburg - International markets, including the JSE, followed Wall Street higher on Tuesday after the Dow Jones index reached its highest level in nine months on Monday evening.
Asian shares traded at the highest level in five months on Tuesday, European markets were also higher and on the JSE the major indices were moderately higher by mid-morning. At that stage the All-share index was 0.40% stronger at 53 382 points while the Top 40 index gained 0.29% to 47 018 points.
The markets received a boost when the oil price steadied on Monday afternoon after falling sharply in earlier trade. The oil price strengthened further on Tuesday morning after a strike in Kuwait helped pull crude oil prices above their overnight lows.
At that stage Brent crude was trading at $43.18 - well off the lows reached on Monday after weekend talks failed in Doha, where producers had hoped to curb a supply glut. A strike in Kuwait temporarily slashed the country's oil output by more than half, and helped pull crude prices higher.
Analysts said news that the Dow Jones index on Monday broke through the level of 18 000 points for the first time since July 21 last year gave new impetus to global markets. The index is now up 2% in 2016 and only about 2% short of its all-time high.
US markets are supported by the recent rebound in the oil price, and signs that the US economy is slowly improving have helped stocks rally from a steep selloff earlier this year.
According to analysts, it also helps that the Federal Reserve is obviously not keen to raise US interest rates soon. “The lack of an ever-present threat of higher interest rates has a lot of people feeling a lot better,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa.
The prospect of no interest changes in the foreseeable future also helped to keep the dollar in check, good news for commodity-driven economies and their currencies.
The rand was trading at R14.41 on Tuesday morning, the highest level this year, while commodity shares were the best performers on the JSE. By mid-morning the Resources index was 1.73% up.
READ: Remember the rand before Nene was fired? It’s back
The Fed will meet next week, but is expected to keep its policy unchanged. However, any suggestion that more hikes are on the way sooner rather than later would lift the greenback.
Wall Street remains extremely cautious about first-quarter reports, many of which will be announced this week. Earnings of S&P 500 companies are seen falling 7.7% on average, which have been discounted, but a bigger drop could lead to renewed selling.
Iron ore companies were again among the stars on the JSE, with Kumba Iron Ore [JSE:KIO] gaining 145.9% over the past 90 days and Assore [JSE:ASR] trading 155.7% stronger over the same period.
On Tuesday morning Assore gained 3.37% to trade at R167.95, a new 52-week high, while Kumba traded 2.59% stronger at R99.51. These shares are supported by a rally in the iron ore price, which has gained more than 25% in recent weeks.
Among the conglomerates, Anglo American [JSE:AGL] gained 3.11% to R146.67 and BHP Billiton [JSE:BIL] was 1.11% higher at R191.01. BHP Billiton was however at one stage as high as R197.04 - more than 5% up on Monday’s closing price.
The Financial index gained 0.53%, with insurer Santam [JSE:SNT] the star performer. The share reached a new 52-week high of R247.33 after gaining 1.95%. Analysts said Santam’s price is supported by the stronger rand, which makes imported spare parts cheaper and brings down the cost of claims for repair work on vehicles.
Banking shares did not move much, with Standard Bank [JSE:SBK] only 0.36% softer at R127.10 and FirstRand [JSE:FSR] unchanged at R47.28.
The industrial sector was a mixed bag and was only 0.07% higher. Naspers [JSE:NPN] lost 1.27% to R2 100.99 but Richemont [JSE:CFR] gained 1.88% to R99.32.
Interest in the retail sector continued on Tuesday with Clicks [JSE:CLS] and Truworths [JSE:TRU] trading at new 52-week highs. Clicks gained 1.43% to R106.50 while Truworths traded 1.07% stronger at a new high of R108.03. Truworths is now 17.3 higher than 30 days ago and Clicks 12.9%.
