JOHANNESBURG – The JSE struggled to come to terms with the implications of a Donald Trump presidential win early on Wednesday, with wild swings between black and red, but seemed to have settled down by midday.
The FTSE/JSE All Share Index (Alsi) was sharply down in early morning trade, but regained some ground as gold and resource stocks benefited and was trading 0.3% higher at 50852.12 points at 12:32.
The Top40 index was up 0.4%.
The rand was under pressure trading 2% weaker at R13.55 to the dollar, and also lost ground to the euro and pound trading at R15 and R16.81 respectively.
Drikus Combrinck, CEO at Capicraft Investment Partners, says the market is reacting as expected with emerging market currencies taking a beating.
The protectionist policies Trump has championed during his campaign suggest that a country like Mexico will come under fire. The Mexican peso collapsed against the US dollar.
Combrinck says although “safe haven” has become a relative term, safe haven currencies like the euro, Swiss franc, pound and even the yen gained ground against the dollar.
Tumisho Grater, economic strategist at Novare, says emerging market currencies will once again face some turbulence which may severely dent the return profile of local-currency bonds.
“The market uncertainty has led to a rush into safe haven buying, as gold surged over 5%. However, on a whole, the markets initial reacted to Donald Trump’s surprise victory was not received as negatively as the Brexit vote.”
The rise in gold and platinum prices supported miners.
Precious metals like gold, silver and platinum also performed well, translating into gains for South African gold and platinum miners.
The gold index was up 7% at 12:35 while resources gained 4.6%.
Financial and industrial shares were on the back foot, with these indices down 1% and 0.6% respectively.
Diversified miners BHP Billiton surged 7% to R220.34 on the JSE while Anglo American was up 5.2% at R198.36.
Harmony Gold rose 10%, DRDGold 9.7% and Sibanye rose 7.4%.
Naspers shed 2% and traded at R2 166.44. FirstRand and Standard Bank lost 2.3% and 1.9% respectively.