JSE lifts as world awaits US jobs data

Johannesburg - Share prices on the JSE rallied once again on Friday, after the market opened higher on the previous two days to end the day in the red.

Currency fluctuations throughout the world, which also affected the rand, were the main force driving markets on Friday as investors wait for the latest US payroll data later in the day. This will give a good indication of what will happen to US interest rates in the near future.

The All-share index on the JSE was supported on Friday by the big dual-listed shares, most of which are also listed in London and followed the FTSE index higher. They also benefited from a weaker rand.

Share prices in London were supported by the beleaguered pound as most of the companies listed on the FTSE index, which earn most of their income abroad, earn more if the pound is weak.

The pound, which is again at the lowest level in 31 years, nosedived by as much as 9% at one point in Asian trade, but recovered later and ended 1.3% softer than earlier levels on the US markets.

READ: Volatility warning after pound's Asia 'flash crash'

As a result the All-share index gained 0.59% by mid-morning on Friday to trade at 51 915 points, while the Top 40 index was 0.68% higher at 45 301 points. On the previous two days both indices opened higher and then drifted lower for the rest of the day, to end the session in the red.

The Industrial index gained 0.65% with most of the big dual-listed shares higher, but the Financial index was only 0.03% up. The big dual-listed commodity shares also pulled the Resources index 1.19% higher with Anglo American [JSE:AGL] reaching yet another 52-week high.

The Gold index continued to be volatile. The index, which opened over 1.5% firmer on Thursday to close more than 2.2% lower, again opened strongly on Friday with investors looking for bargains after it lost almost 30% of its value over the past 30 days. By mid-morning the Gold index was 1.32% higher.

The plunging pound was the big news of the day, with the British currency coming under renewed pressure as fears grow that Britain's divorce from the European Union will be messier and costlier for the economy than expected. UK Prime Minister Theresa May on Sunday set a March deadline for the formal departure process from the EU to begin.

Traders are baffled, as the moves in the value of the pound are even bigger than after the Brexit vote.

Some analysts said investors had money positions that Brexit will be a non-event with not much changing, and they are now clearing their positions as it seems British politicians are taking such a hard stance on immigration that the UK may have to forfeit the benefits of a single market, with serious consequences for the economy.

The JSE is similar to the London market as the biggest shares, which represent more than half the market capitalisation, also earn most of their income abroad and are benefiting from a weak currency.

The rand lost 1.53% on Friday morning to R13.93 to the dollar in response to a stronger greenback, which is discounting a possible rate hike in the US in December. Friday’s jobs data will give an important indication of the state of the US economy, and a positive report will certainly increase the possibility of a hike.

Among the big dual- listed shares that earn most of their income abroad - and are worth more in rands if the currency depreciates - Naspers [JSE:NPN] traded 1.07% higher at R2 354.00 and Steinhoff [JSE:SHF] was 0.66% stronger at R76.52, but British American Tobacco (BAT) [JSE:BTI] lost 0.82% to R845.19. BAT is now almost 3% lower over the past week.

Sasol [JSE:SOL] continued its strong recovery of the last few days and traded 1.54% firmer at R394.69 on the back of a stronger oil price. Before Friday's trade the share was already 8.25% higher over the previous seven days.

The price of Brent crude improved to above $52 per barrel, spurred by an informal meeting among the world's biggest producers on output cuts and falling US crude inventories.

In early trade the Financial index was more than 0.5% lower, but recovered by mid-morning. FirstRand [JSE:FSR] was 0.78% higher at R46.40 and Standard Bank [JSE:SBK] gained 0.82% to R146.35.

Anglo American [JSE:AGL] reached yet another 52-high after the share price gained 1.98% to R180.46. Before Friday’s trade the stock was 7.7% higher over the previous seven days and a massive 172.7% better for the year to date.

BHP Billiton [JSE:BIL] is also making a strong run over the past seven days and before Friday’s trade was already 8.39% higher over that period. The share price gained 1.8% to R215.65 by mid-morning on Friday, but is only 24% higher for the year to date.