Johannesburg - The JSE edged up at the closing bell on Monday,
signalling that investors had welcomed the outcome of the
European bank stress
tests.
Resurfacing rumours about the possible takeover of Nedbank also moved the local market, a
portfolio manager said.
The JSE all share index rose 0.26%, as platinum miners climbed 0.68%. Bucking the positive
trend, gold miners lost 0.87% and resources fell 0.02%. Banks strengthened
0.68%, financials gained 0.63% and industrials edged up 0.35%.
The rand was bid at R7.35 to the dollar from R7.42 at the JSE's close on Friday. Gold was
quoted at $1 181.43 a troy ounce from $1 190.22/oz at the JSE's previous
close, while platinum was at $1 546.50/oz from $1 542/oz before.
Kevin Algeo, portfolio manager at Imara S P Reid, said the market reacted well to the
results of the stress tests, despite reservations about the criteria used in
the tests.
The tests found that only seven out of 91 European banks would have to raise new capital.
Algeo said rumours that Nedbank is an acquisition target also lifted banking stocks and
prompted the rand to strengthen.
The strong rand suggests that investors are prepared to buy risky assets, Algeo said.
Dow Jones newswires reports that the industrial sector led US stocks higher on Monday
following a bigger-than-expected jump in new-home sales and a rosy outlook from
FedEx.
After investors had been disappointed in recent weeks by a slew of economic data that
had been pointing to a slowdown, the market was pleasantly surprised
on Monday by the report of a 23.6% jump in new-home sales in June from
the previous month, much better than the 3.7% gain expected.
The report, coupled with an increase in FedEx's earnings guidance, helped lift the Dow
Jones Industrial Average back into positive territory for the year to date.
However, the housing report wasn't all positive, as the June new-home sales level was the
second-lowest on record since 1963 and May's sales were revised lower.
"I wouldn't get too excited about it either way, but it just underscores how low expectations
were," said Barry Knapp, managing director of equity research at Barclays
Capital.
Knapp said a drop in inventories was encouraging, but he pointed to the downward revision in
May's sales as a clear negative.
- I-Net Bridge