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Cape Town – Trading on the local bourse remained positive on Tuesday as the rand weakened 0.65% to R13.9 by the close of the JSE.
The weaker rand supported the rand-hedge stocks, whilst capping interest-rate sensitive banks and retailers. Gold miners continued their retreat as the gold price fell for a second consecutive day.
The rand, as well as other emerging market currencies, have been supported by a global search for yield, and a weaker dollar index caused by the recent French election. The South African bond market softened slightly, with the benchmark R186 closing at 8.677% from 8.620% on Monday.
At the close of trading, the gold spot price had dropped 0.65% to $1267/Oz as investor sentiment remains skewed towards riskier assets, such as equities, in the wake of the French election results. The French election results have been broadly positive for international equity markets, reducing the risk of a repeat Brexit like shock with the ‘Frexit’ threatened by Marine le Pen.
A 1.85% rally in the price of Naspers [JSE:NPN], the largest company on the JSE, propelled the market forward. The spike in Naspers was primarily driven by a jump in the price of its foreign investment, Tencent, with the price reaching an intra-day high of R2 558.44.
The blue-chip Top 40 Index gained 0.73% followed by the broader All Share Index which firmed 0.63%. The resources sector was negatively affected by weaker commodity prices, with the Gold Index dropping 3.29% and the Resources Index down 0.22%. The industrial index gained 1.08% and Financial Index firmed 0.19%.
Sibanye Gold’s shareholders approved a R28.67bn acquisition of U.S. based platinum producer, Stillwater Mining. The deal represents the group’s first international venture, and is set to make Sibanye one of the largest platinum group metal (PGM) producers in the world. The details of the buyout have not yet been finalised, and market participants must wait and see what is in store for the local miner.
International markets have continued their positive rally, with the S&P 500 up 0.54% to $2386. US President Donald Trump announced that he is open to waiting until later this year to secure funding for a wall along the border with Mexico. The shift could clear the way for lawmakers to strike a deal avoiding a government shutdown on Saturday, which officially marks Trump's 100th day in office.
The President has also directed staff to accelerate efforts to draft a tax plan which would slash the corporate rate from 35% to 15%. Priority will be given to cutting rates rather than concerns regarding potential deficits.
The price of brent crude oil remains steady at $51.60/bbl, as markets pause amid doubts surrounding Opec’s ability to reduce global crude oil inventories. The price of oil has fallen by more than 10% since the beginning of the year, despite the efforts led by Opec and Russia to cut output.
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*This report is from the Trading Desk at EasyEquities, Fin24's latest content partner on equities and market moves.
