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Rand sensitive stocks buoy JSE as rand runs on Zuma report

May 23 2017 18:19
Musa Makoni, trading desk at EasyEquities

Johannesburg - The rand firmed to session highs of R13.02 against the US dollar, as news came out that the ANC’s NEC was going to raise the option to remove President Jacob Zuma as part of the discussions on the no-confidence motion called by opposition parties.

As a result, rand sensitive stocks such as banks and retailers traded firmer on the day.

READ: Rand rallies on report of Zuma removal talks

Standard Bank [JSE:SBK] and Nedbank [JSE:NED] were the biggest gainers on the Financials index, closing up 3.63% and 3.27% respectively.

Retailers were slightly mixed, with Shoprite [JSE:SHP] closing 1.99% firmer, Truworths [JSE:TRU] was up 0.57%, however Mr Price closed down 0.50% [JSE:MPC].

Sasol [JSE:SOL] had a decent run, closing the day up 1.22%, mainly on the back of firmer Brent crude prices.

Coronation [JSE:CML] released a somewhat lukewarm set of results but nonetheless, they rallied in today’s trading session and closed up 5.71%. Surprisingly, Rhodes Food Group [JSE:RFG] traded lower despite reporting increases in operating profit margin, earnings per share and headline earnings per share for the 6 months reported. The stock closed the day down 4.81%.

The JSE All-share index closed 0.06% firmer, the JSE blue chip Top 40 was up 0.09%. Financials posted gains of 1.39%, mainly on the back of the firmer rand. Resources were 0.78% weaker and Industrials also closed weaker, posting losses of 0.08%.

Locally, investors are now looking forward to the CPI and PPI data which is expected from StatsSA on Wednesday and Thursday respectively. This should provide some insight on the change in the cost of goods, and more importantly it will be key to see if inflation is within the South African Reserve Bank’s upper target of 6%.

South African consumers will be looking for a bit of relief when the CPI data is released, however recent increases in Brent crude prices could mean that we will see that increased cost being passed on to consumers in the short term.

Gold traded mostly flat on the day. Despite the terror attack in Manchester, England, we did not see much volatility in the underlying gold prices. At the JSE close, gold was trading at $1 259.90 per ounce, having managed to reach a high of $1 263.88/oz in the early hours of trading.

The price of the commodity has also been aided by the weakness in the US dollar, which is still relatively weaker against a basket a major currencies. Platinum traded higher on the day, managing to reach highs of $958.54/oz before trading at $954.35/ozat the close of the JSE.

Brent crude extended gains in today’s trading session, on the back of the prior day’s announcement by the Saudi energy minister of extended output cuts. Brent crude managed to reach session highs of $54.19 per barrel, before trading at $54.03 per barrel when the JSE closed. Globally, the sentiment for Brent crude remains bullish as OPEC members seem adamant to stick to the agreed production cuts.

* This report is from the Trading Desk at EasyEquities, Fin24's latest content partner on equities and market moves.

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