Johannesburg - A positive mood returned to world markets on Monday and the JSE responded by lifting all major indices higher.
The rally started on Friday at Wall Street, which was buoyed by expectations that the oil price is bottoming out. On Monday morning there were also glimmers of good news about the Chinese economy, indicating the Chinese government’s spending initiatives are holding up growth in the world’s second biggest economy. The Asian and European markets were also stronger as investors were reassured by stimulus steps taken by the European Central Bank last week.
But global investors are expected to remain cautious ahead of policy decisions by the Bank of Japan on Tuesday, the US Federal Reserve on Wednesday and the Bank of England on Thursday. Analysts however do not expect drastic moves at any of these meetings after the ECB’s aggressive easing last week.
By mid-morning the All-share index was already 1.42% higher at 42 474 points and the Top 40-index was 1.60% stronger at 46 492 points.
The major indices were supported by the Industrial index gaining 1.19% on the back of buoyant European markets and the Financial index, which traded 1.61% higher on the back of another strong performance by Old Mutual [JSE:OML]. The resources sector was at that stage already 2.89% higher, but resources now form only a small part of the major indices.
Chinese data on Saturday showed further weakness in much of the economy, but also contained a few bright spots. Manufacturing output in January and February grew at its weakest pace since 2008, while retail sales rose at their slowest rate since May 2015.
But fixed-asset investment, a crucial driver of the economy, gained 10.2% in the first two months compared with the same period a year earlier, while property sales and home mortgages climbed sharply. Fixed asset investment should also support commodity prices, which are approaching a turning point.
"Chinese data showed further weakening across the board, but it is clear that government spending and a recovery in the real estate market are helping hold up growth," Angus Nicholson, market analyst at IG Markets, said in a note to clients.
Old Mutual was again the busiest share on the JSE in terms of volume, as the market is still digesting the news that the dual-listed group will be broken up into four different companies. On Friday the stock traded sharply lower, but by mid-morning on Monday it was already 3.08% higher at R41.23.
Nedbank [JSE:NED], the banking part of Old Mutual which will lose a strong controlling shareholder, was 0.70% lower at R172.79.
Since the possibility of a break-up of Old Mutual became known last Monday, the share price has been volatile but by Friday afternoon it was 2.28% stronger than 7 days earlier. Nedbank however has lost almost 10% since the news was first mooted a week ago.
Among the other banks FirstRand [JSE:FSR] traded 1.51% higher at R44.42 and Standard Bank [JSE:SBK] was 0.80% stronger at R122.08.
In the industrial sector Naspers [JSE:NPN] performed strongly and gained 2.84% to trade at R1 994.05. There were also huge trades in Sasol [JSE:SOL] shares and the stock gained 0.11% to R471.43. MTN [JSE:MTN] gained 1.06% to R146.57, despite the fact that the company still could not reach a deal with the Nigerian authorities about its huge fine of over R7bn.
Steinhoff [JSE:SHF], which is also listed in Frankfurt, traded 0.36% higher at R89.97 - just below the 52-week high of R90.00. The share reached a high of R91 earlier in the day, setting a new intraday level over 52 weeks. Steinhoff, which is currently dealing with a few significant takeover bids in Britain, gained more than 18% over the past 30 days.
The big dual-listed commodity companies also benefited from higher European markets and Anglo American [JSE:AGL] rose 5.05% to R117.41. BHP Billiton [JSE:BIL] was 4.16% stronger at R184.92.
African Rainbow Minerals [JSE:ARI], which indicated on Friday that it might be interested in acquiring Kumba’s [JSE:KIO] assets from Anglo American, traded 0.80% stronger at R101.16. The local commodity group gained 66.7% over the past 30 days. Kumba, which is 158.6% higher than a month ago, gained 1.14% to R95.06.