JSE set to break through to a new record

In a welcome bout of optimism to hit the JSE, Africa’s biggest bourse saw around R36 billion in trade on Tuesday to rally within a whisker of the 80 000 points mark.

The JSE closed 3.5% stronger, its biggest surge in a single day this year, on the back of market cheer around SA’s planned government of national unity (GNU), which will include the ANC, DA, IFP, PA, Good party, PAC and possibly others.

Read: JSE on fire as SA Inc stocks surge

While the JSE did surpass the psychological 80 000 points level on 20 May, just before the elections, as well as back in January 2023 for the first time, market watchers are eyeing a new record for the bourse (above the 80 550 points close mark). It closed at 79 749 on Tuesday, with the Financials Index surging almost 7%.

JSE All Share index

THE rand also rallied, to R18.04 against the US dollar – more than 1.1% stronger on Tuesday evening. Expectations are that it will break through the key R18 level this week and test the next psychological level of R17 to the greenback after the GNU cabinet is announced by President Cyril Ramaphosa.

Ramaphosa is only expected to reveal the cabinet following his inauguration on Wednesday.

Banking, financial services, retail, consumer goods, and consumer services stocks led the surge on the JSE – largely SA Inc stocks.

Some 37 listed companies hit 52-week highs on Tuesday, including the JSE itself and majors like Capitec, Sanlam, Nedbank, Momentum, FirstRand, Standard Bank, OUTsurance, Shoprite, TFG, Truworths, Clicks, Mr Price, Investec, Aspen and Vukile Properties.

Sasol and Truworths led the charge among the top 100 stocks, surging over 10% on the day.

TFG, property counter Resilient Reit, Bidvest and Capitec jumped over 9%.

Clicks, Sanlam, Vukile and Life Healthcare – all up over 8% – rounded off the top 10 biggest gainers on Tuesday (within the JSE’s top 100 biggest stocks).

Commenting on the Market Watcher segment of the SAfm Market Update with Moneyweb show with host Jimmy Moyaha on Tuesday night, FNB Wealth and Investments head of investment research, Chantal Marx, said the jump on the JSE was “really South African-driven [by] SA Inc” stocks.

“So that strong performance by financials – and midcaps and small caps also up in excess of 4.5% today [saw] a really solid day, with even Sasol catching a bid,” she added.

She agreed with Moyaha that the strong market sentiment came on the back of the positive political news around SA’s GNU plan.

“I don’t think we can overestimate how much it means from a confidence perspective, both locally and globally, when you have a mature transition of power, so to speak,” said Marx.

“So, we could have seen something completely different take place in the South African context, given that the ruling party fell below 50% for the very first time.

“I think this relative calmness and mature approach has really been quite remarkable and quite different to even what we saw in other emerging markets that went through elections more recently. And if you consider the chaos that’s going on both in France and in the European Parliament currently, suddenly we [SA] don’t look that bad.”

Big trading moves

Just One Lap’s Simon Brown, who also hosts the daily MoneywebNOW podcast, said around R36 billion in value was traded on the JSE on Tuesday, and “that’s big”. He said this excluded any after-market trades.

Asked if the 3.5% surge in the JSE on Tuesday could be a market overreaction, Brown said: “That’s the big question we all want to know and get an answer to.”

Earlier in the day, he told Moneyweb that the last time the JSE jumped by more than 3% on a single day was in November 2022 and in 2018, when Ramaphosa became president.

“This is the first time in many years that we are seeing our market jump higher on our own news rather than offshore news, which is good news for SA,” said Brown. –  bbc.com