Categories: JSENews

The JSE rises in tandem with global equities markets

Published by
Nonhlanhla P Dube

The South African stock market rose alongside global equity markets (FTSE/JSE Capped SWIX 2.8% MoM), recovering from a disastrous June and pushing back into positive territory year to date (-1.9% YTD). Contributions were positive across the board, with companies focused on the domestic economy among the top performers as they recovered from a particularly difficult June.

Despite continued pressure on commodity prices (iron ore -8 % MoM), miners were generally stronger after a difficult June, with the exceptions being Sasol (-6 % MoM), which followed the oil price lower, and Anglo Platinum and Kumba Iron Ore (-11 % and -6 % MoM, respectively), both of which reported disappointing results during the month.

Thungela (one of the biggest local beneficiaries of increasing export coal prices) was once again one of the best-performing shares (+26 % MoM). Other notable outperformers included Richemont (+15% MoM), which provided a trading report for the most recent quarter that was ahead of consensus forecasts, advancing strongly off already exceptional levels, and Telkom (+19 % MoM), which rose on news that MTN was considering acquiring it.

Considering the 13 % MoM dip in the price of their largest underlying investment, Chinese tech company Tencent’s investment firms Naspers and Prosus fared relatively well (-0.5 % and +2.4 % MoM, respectively). Tencent fell along with most Chinese companies this month as a result of another fine from Chinese regulators, and a COVID-19-related lockdown in Macau served as a warning to investors of the looming threat of Chinese government intervention.

Load shedding continued to plague the country in the first half of July, at least in part due to strike action by Eskom staff. Poor domestic sentiment combined with growing fears of a global recession pushed the local currency above R17 to the US dollar for the first time since September 2020.

A mid-month agreement on Eskom’s wage negotiations aided the suspension of load shedding, and the government’s announcement of significant measures aimed at alleviating the energy crisis boosted local sentiment, with the currency ending the month only 2.1 % weaker against the greenback at R16.62/$1.

Local inflation figures for June (7.4 % year on year) followed a global trend, coming in higher than in May and somewhat higher than expected. The core inflation data (excluding volatile food and energy components) was 4.4% year on year, broadly in line with the SA Reserve Bank’s (Sarb) objective.

Despite more muted core inflation, the Sarb used its July meeting to raise rates by 0.75 % (the highest increase in over 20 years) to 5.5 %, above expectations for a 0.5 % hike as the local central bank sought to maintain a lead over global inflationary forces. South African government bond yields fell in line with global yields, with the 10-year government bond yield closing the month 0.2 % lower at 10.8 %.

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube
Tags: JSE
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