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JSE firmer as weaker rand buoys Rand Hedges


18 May.png

JSE firmer as weaker rand buoys Rand Hedges

The rand weakened sharply as a fresh political crisis hit Brazil, affecting emerging markets.  The rand was particularly affected by emerging market weakness and retreated to R13.58 before closing at R13.44 to the dollar.

The blue-chip Top 40 firmed 0.56% followed by the broader All Share Index, which closed 0.36% higher.  The market rally was led by industrials firming 0.55%, with Naspers [JSE:NPN] gaining 1.36% on the back of a positive trading update from its investment in Chinese media giant, Tencent.

Resources firmed 0.64% while the gold index slipped 0.77%.  The weak rand hurt the banking index and retailers which dropped 0.68% and 1.55% respectively.  Truworths [JSE:TRU] was the worst affected of the major retailers, and collapsed 3.43% to R73.16 per share. 

Sibanye Gold [JSE:SGL] finalised a R13.5 billion rights issue at a 60% discount, offering new shares to existing shareholders at R11.28 each.  The new capital will be used to repay a portion of a credit facility used to acquire Stillwater mining, a US platinum producer. The share price closed 4.14% lower at R27.30, while Sibanye is set to become one of the largest Platinum Group Metal (PGM) producers in the world.

Once the world's biggest car company in terms of sales, General Motors [NYSE:GM] has been retreating from several major and unprofitable markets under CEO Mary Barra. GM is set to stop selling vehicles in India, but will continue to manufacture and export cars from the country, and sell its operations in South Africa to Japanese owned, Isuzu. 

Economic data from Japan suggests that the economy picked up speed in the first three months of 2017, extending its most recent stretch of growth under Shinzo Abe to five quarters and marking the longest expansion in a decade. Stronger global demand, especially for tech-related items, and an improvement in household spending helped GDP beat forecasts and rise 2.2% on an annualized basis

The Brazilian Real weakened 7% against the dollar as a fresh political crisis is hitting Brazil, reminiscent of last year's impeachment saga, following reports that President Temer was secretly recorded discussing hush money pay-offs to a jailed associate. Tapes were presented to prosecutors as part of a plea bargain by Joesley and Wesley Batista, brothers who run the country's biggest meat-packing firm JBS

Brent Crude climbed 0.24% to $52.43/bbl after US crude inventories fell 1.8 million barrels last week.  The drawdown was smaller than expected, but shows some indication that the cuts by Opec are starting to make a dent the global oil glut. 

Gold prices eased 0.55% to $1253/Oz on Thursday after a bounce in the dollar prompted some buyers to cash in gains following on this week’s strong rally.  Uncertainty over the outlook for the Trump presidency reinforced the price of the metal. 

Martin Harris, Trading desk at EasyEquities, For Fin24
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