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Johannesburg - The JSE followed European markets sharply higher on Tuesday as investments started to flow back to the developed world on increased optimism about the European Union's economic prospects and political stability after the market-friendly results of the French election.
The Industrial index on the JSE was particularly strong, and at mid-morning it was only 2 points lower than the previous all-time high as the rand traded at its lowest level in almost a month.
The strong performance on the JSE was triggered by a bigger demand for dollars, as investors started to sell the safe haven assets which were popular amid uncertainty about the French election.
This was not good news for the rand but very good news for the rand hedge shares in the industrial and resources indices on the JSE. The rand traded almost 2% softer at R13.69 to the dollar, mostly due to the stronger dollar.
European stock markets lifted on Emmanuel Macron's victory in France, supporting the dual-listed shares on the JSE which represent more than half of its market value.
European markets were also supported by good news on the economic front, as latest data showed Germany's industrial orders rose for the second consecutive month in March, for the first time since 2015. Germany's quarterly economic growth, to be released on Friday, is now expected to pick up to 0.6% in the first quarter from 0.4% in the final three months of last year.
The Industrial index, which includes most of the big capitalisation shares on the JSE, at mid-morning was 0.91% higher at 82 076 points, only 2 points behind the current high of 82 078 points. Some of the big shares in the index, such as Naspers, [JSE:NPN], gained almost 3%.
The Resources index also benefited from a significantly weaker rand, as mining companies receive more in rand for their commodities. At mid-morning the index was already 1.67% higher. Commodity prices however remained at current low levels.
The result was that the All-share index gained 0.91% to 54 153 points. The Top 40 index, which includes all the big capitalisation shares on the JSE, traded 1.04% higher at 47 566 points. The Financial index hardly moved and was only 0.02% up.
All the major shares in the Industrial index traded higher. Naspers gained 2.89% to a new all-time high of R2 683.47 and Richemont [JSE:CFR] rose 0.94% to a new 52-week high of R116.45, which is now just below the all-time high of R117.55. British American Tobacco [JSE:BTI] was 1.47% stronger at R944.72, and is now also approaching its previous 52-week high.
The big dual-listed commodity companies also traded higher, with Glencore [JSE:GLN] 3.08% up at R57.58. BHP Billiton [JSE:BIL] again traded above R200 after gaining 2.39% to R202.64. Anglo American ]JSE:AGL] was 2.95% stronger at R182.24.
