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Johannesburg - The JSE continued its upward trend on Thursday, in line with other world markets as the world awaits the outcome of an important European Central Bank (ECB) meeting.
In the process the All-share index broke through the level of 50 000 points again and the Top 40-index through 44 000 points, which means important resistance levels have been breached.
READ: Inflation drop boosts JSE
Investors worldwide seem pretty certain that the ECB will announce details of a bond buy-back programme that will inject some necessary cash in the eurozone’s banking system in an effort to stimulate economic growth and fight deflation.
Any economic stimulus programme in Europe will have repercussions worldwide, as emerging markets like South Africa are dependent on growth in the eurozone for a major part of their exports. Some of that cheap cash will also be used by European investors to search for higher yields in emerging markets.
The JSE also continued to reap benefits from Wednesday’s excellent inflation figures, which sparked a debate on whether South African interest may be lowered in the near future.
With expectations that inflation - currently at 5.3% - may drop to below 5% this month, there are economists who think the Reserve Bank has room to lower interest rates to boost the flagging economy.
READ: Interest rate cut could be looming
Others warned that interest rates should remain at current levels to retain the interest differential with developed countries to attract investors from countries where rates are at all-time lows, because the United States is expected to start raising interest rates in the second half of the year.
The drop in the inflation rate is mainly due to sharp losses in the petrol price, after it fell by more than 60% in recent months. Economists said that the lower fuel price has put an additional R35bn in consumer’s pockets and it could even be more, as a further drop of at least R1.00 per litre is expected.
READ: Petrol price could drop by R1 - expert
Lower interest rates can increase consumer spending power even more, and that is why most of the major retail groups traded at new 52-week highs on Thursday morning, including Massmart [JSE:MSM], Shoprite [JSE:SHP], Woolworths [JSE:WHL] and Clicks [JSE:CLS].
Retail shares have been performing strongly for the past month, as most of the big groups announced better-than-expected sales figures over the Christmas period.
Massmart is now 33.6% stronger for the year, but 24.2% of those gains have happened over the last 30 days. Shoprite is now 15.5% higher for the year after it gained 14.1% over the last 30 days.
Woolworths was the best performer of the day with a gain of 1.44% to R86.15, while Shoprite increased by 1.32% to a new high of R180.35. Massmart increased by 0.57% to R171.37.
Clicks was only 0.12% higher at R86.35, but it was enough to push the price past the previous high of R86.25. Pick n Pay [JSE:PWK] was unchanged at R23.56.
The Industrial index rose by 0.88%, with SABMiller [JSE:SAB] gaining 0.83% to R595.44. Naspers [JSE:NPN] was 0.97% higher at R1647.77.
The Resources index was 2.96% higher, with Sasol [JSE:SOL] again above R400 after it gained 3.6% to R403.76. Anglo American [JSE:AGL] recovered to above R200 to trade 3.73% higher at R200.29. BHP Billiton [JSE:BIL] was 2.64% higher at R253.24.
In the process the All-share index broke through the level of 50 000 points again and the Top 40-index through 44 000 points, which means important resistance levels have been breached.
READ: Inflation drop boosts JSE
Investors worldwide seem pretty certain that the ECB will announce details of a bond buy-back programme that will inject some necessary cash in the eurozone’s banking system in an effort to stimulate economic growth and fight deflation.
Any economic stimulus programme in Europe will have repercussions worldwide, as emerging markets like South Africa are dependent on growth in the eurozone for a major part of their exports. Some of that cheap cash will also be used by European investors to search for higher yields in emerging markets.
The JSE also continued to reap benefits from Wednesday’s excellent inflation figures, which sparked a debate on whether South African interest may be lowered in the near future.
With expectations that inflation - currently at 5.3% - may drop to below 5% this month, there are economists who think the Reserve Bank has room to lower interest rates to boost the flagging economy.
READ: Interest rate cut could be looming
Others warned that interest rates should remain at current levels to retain the interest differential with developed countries to attract investors from countries where rates are at all-time lows, because the United States is expected to start raising interest rates in the second half of the year.
The drop in the inflation rate is mainly due to sharp losses in the petrol price, after it fell by more than 60% in recent months. Economists said that the lower fuel price has put an additional R35bn in consumer’s pockets and it could even be more, as a further drop of at least R1.00 per litre is expected.
READ: Petrol price could drop by R1 - expert
Lower interest rates can increase consumer spending power even more, and that is why most of the major retail groups traded at new 52-week highs on Thursday morning, including Massmart [JSE:MSM], Shoprite [JSE:SHP], Woolworths [JSE:WHL] and Clicks [JSE:CLS].
Retail shares have been performing strongly for the past month, as most of the big groups announced better-than-expected sales figures over the Christmas period.
Massmart is now 33.6% stronger for the year, but 24.2% of those gains have happened over the last 30 days. Shoprite is now 15.5% higher for the year after it gained 14.1% over the last 30 days.
Woolworths was the best performer of the day with a gain of 1.44% to R86.15, while Shoprite increased by 1.32% to a new high of R180.35. Massmart increased by 0.57% to R171.37.
Clicks was only 0.12% higher at R86.35, but it was enough to push the price past the previous high of R86.25. Pick n Pay [JSE:PWK] was unchanged at R23.56.
The Industrial index rose by 0.88%, with SABMiller [JSE:SAB] gaining 0.83% to R595.44. Naspers [JSE:NPN] was 0.97% higher at R1647.77.
The Resources index was 2.96% higher, with Sasol [JSE:SOL] again above R400 after it gained 3.6% to R403.76. Anglo American [JSE:AGL] recovered to above R200 to trade 3.73% higher at R200.29. BHP Billiton [JSE:BIL] was 2.64% higher at R253.24.
