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Financials rally despite weaker rand

May 02 2019 18:30
Musa Makoni*

The JSE inched higher on Thursday, mainly on the back of gains that were recorded in the financials and industrials indices.

Global markets digested the US Fed's decision to keep interest rates unchanged at 2.50%, as the Fed chair highlighted the committee's confidence at the current inflation rate as well as its focus on household spending and business investment.

The Bank of England also decided to leave interest rates unchanged in a decision that was announced on Thursday, and perhaps more importantly, the bank decided to keep its current asset purchase programme unchanged.

The US will be in the spotlight again on Friday as we expect the release of the all-important Non-Farm Payrolls numbers for the month of April.

As expected, the US dollar was volatile on Wednesday before the US Fed's rate decision and press conference. After the decision, the greenback managed to close the session firmer and this trend continued into Thursday as it advanced further.

The rand came under pressure as a result as it fell to a session low of R14.54/$. At 17:00 CAT, the rand was trading 0.66% weaker at R14.54/$. This was despite an improvement in the Absa Manufacturing PMI numbers for April, which improved to 47.2 from a prior recording of 45.0.
 
On the JSE, EOH Holdings [JSE:EOH] had a stellar day as it jumped 17.24% to end the day at R23.94. Hospitality group Tsogo Sun Holdings [JSE:TSH] managed to gain 4.55% as it closed at R22.50, while its sector peer Sun International [JSE:SUI] climbed 7.92% to end the day at R59.24.

Intu Properties [JSE:ITU] added 6.5% as it closed at R19.00, Accelerate Property Fund [JSE:APF] gained 3.64% to close at R3.13, while Capital & Counties [JSE:CCO] dropped 1.75% to close at R46.00.

Banks also recorded decent gains despite the rand trading weaker. Nedbank [JSE:NED] gained 2.42% to R272.50, ABSA Group [JSE:ABG] rose 2.34% to R168.10, and Investec Limited [JSE:INL] added 3.3% to close at R94.36.

Miners took most of the brunt in Thursday's session led by Sibanye Stillwater [JSE:SGL] which fell 6.99% to close at R12.51, while Lonmin [JSE:LON] lost 6.16% to end the day at R12.19.

Harmony Gold [JSE:HAR] dropped 5.09% to close at R23.29, Northam Platinum [JSE:NHM] lost 4.7% to close at R56.80, and AngloGold Ashanti [JSE:ANG] lost 3.48% to R166.31.

Rand hedge British American Tobacco [JSE:BTI] lost 2.53% as it closed at R543.09, while Sappi [JSE:SAP] closed at R67.00 after losing 1.73%.

The JSE All-share index eventually closed 0.37% firmer while the JSE Top-40 index inched up 0.42%. The Resources index came under pressure as it fell 1.16% while the Industrials and Financials indices gained 0.66% and 1.62% respectively.
 
Brent crude retreated on the day as it was recorded trading 2.41% weaker at $70.44/barrel just after the JSE close.

At 17:00 CAT, Gold was 0.56% weaker at $1 269.60/Oz, Platinum had lost 1.4% to trade at $854.50/Oz, and Palladium was 0.16% firmer at $1 353.40/Oz.

musa market

* Musa Makoni is a trading specialist at Purple Group.

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