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Johannesburg - New chairperson of the Federal Reserve Janet Yellen will continue with tapering of quantitative easing, but that did not send shock waves through emerging markets on Wednesday morning.
On the contrary, emerging market panic seemed to abate and share prices on the JSE as well as the rand firmed on Wednesday morning. The mood was further supported by good news on the Chinese economy.
By midday the All-share index was back above the 46 000 level, 0.376 points or 0.82% higher at 46 243. The Top 40 Index traded 377,16 points or 0.91% higher at 41 677.
The rand was also firmly below R11.00 to the dollar and at midday traded at R10.94 per dollar.
Rand Merchant Bank said in a note on Wednesday morning that Yellen’s first testimony to the American congress on Tuesday afternoon affirmed that the Fed is set to continue tapering quantitative easing by $10bn per month.
On face value this is bad news for emerging markets as the tapering leads to an outflow of capital, but markets also like certainty. The fact that there seems to be no possibility of the tapering being increased reassured investors, as most of the bad news has been discounted already.
There was also other good news about the world’s two top economies which will be a boost for South African exporters of commodities.
Yellen was quite upbeat about the American economy's prospects despite disappointing jobs data, but indicated that interest rate hikes are a long way off. The US House of Representatives also passed an increase in the government’s debt limit.
But the real surprise on Wednesday morning, which gives the rand and commodity shares a big boost, is that China announced a massive trade surplus - the biggest since 2009.
Standard Bank trader Maemo Rametse said in a note that this should go some way to ensure the markets are a little more relaxed about global, as well as internal Chinese, demand.
China is a major consumer of South Africa's minerals. The resources sector improved 1.85% on this news. Stocks that moved on the JSE were BHP Billiton‚ which was up 481c or 1.442% at R338.10‚ and Sasol‚ which was 1 028c or 1.95% firmer at R537.88.
Anglo American traded at R281, which was 610c or 2.22% higher than Tuesday’s close.
- Fin24
Although the gold price was $4,94 lower at $1 285,86 the gold index strengthened 4,16% this morning. Gold Fields rose 167c or 4,01% to R43.30‚ Harmony was up 117c or 3,61% at R33.62 and Anglo Ashanti soared 748c 9r 4,17% to R186,70.
On the contrary, emerging market panic seemed to abate and share prices on the JSE as well as the rand firmed on Wednesday morning. The mood was further supported by good news on the Chinese economy.
By midday the All-share index was back above the 46 000 level, 0.376 points or 0.82% higher at 46 243. The Top 40 Index traded 377,16 points or 0.91% higher at 41 677.
The rand was also firmly below R11.00 to the dollar and at midday traded at R10.94 per dollar.
Rand Merchant Bank said in a note on Wednesday morning that Yellen’s first testimony to the American congress on Tuesday afternoon affirmed that the Fed is set to continue tapering quantitative easing by $10bn per month.
On face value this is bad news for emerging markets as the tapering leads to an outflow of capital, but markets also like certainty. The fact that there seems to be no possibility of the tapering being increased reassured investors, as most of the bad news has been discounted already.
There was also other good news about the world’s two top economies which will be a boost for South African exporters of commodities.
Yellen was quite upbeat about the American economy's prospects despite disappointing jobs data, but indicated that interest rate hikes are a long way off. The US House of Representatives also passed an increase in the government’s debt limit.
But the real surprise on Wednesday morning, which gives the rand and commodity shares a big boost, is that China announced a massive trade surplus - the biggest since 2009.
Standard Bank trader Maemo Rametse said in a note that this should go some way to ensure the markets are a little more relaxed about global, as well as internal Chinese, demand.
China is a major consumer of South Africa's minerals. The resources sector improved 1.85% on this news. Stocks that moved on the JSE were BHP Billiton‚ which was up 481c or 1.442% at R338.10‚ and Sasol‚ which was 1 028c or 1.95% firmer at R537.88.
Anglo American traded at R281, which was 610c or 2.22% higher than Tuesday’s close.
- Fin24
Although the gold price was $4,94 lower at $1 285,86 the gold index strengthened 4,16% this morning. Gold Fields rose 167c or 4,01% to R43.30‚ Harmony was up 117c or 3,61% at R33.62 and Anglo Ashanti soared 748c 9r 4,17% to R186,70.
