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Johannesburg - The JSE followed world markets higher on Wednesday morning, as global stocks were boosted by good Chinese inflation numbers, raising hopes that we have seen the end of tightening in that country.
Firmer US stocks overnight were also aiding sentiment, as
was Italian Prime Minister Silvio Berlusconi's announcement that he would
resign.
By 09:15 local time, the JSE All Share [JSE:J203] index was
up 0.23%, with platinum miners up 1.08%, resources 0.48% higher and gold stocks
added 0.69%.
Banks collected 0.17%, financials advanced 0.18%, but
industrials were flat.
The rand was bid at R7.84 to the dollar, from R7.85 at the
JSE's close on Tuesday. Gold traded at $1 788.18 a troy ounce from $1 794.91/oz
at the JSE's previous close, while platinum was at $1 663.20/oz, from $1
669.20/oz previously.
"The inflation news from China has raised hopes that it
may be the end of tightening there - there has been a pick up in Chinese banks
and property stocks. The US also picked up last night (the Dow was up 0.84%)
and the announcement from Berlusconi have all given the market a bit of a tail
wind, despite US futures being a bit lower this morning," said a trader
He added that the market would take its direction from
newsflow from Europe and then later on the data from the US, notably the
wholesale inventory data.
He added that the JSE has had a quiet start with light
volumes.
Dow Jones Newswires reported that Asian stock markets rose
on Wednesday and Italian bond yields fell from record highs after Italian Prime
Minister Silvio Berlusconi promised to quit, lifting hopes Rome can avoid being
ravaged by the eurozone sovereign debt crisis.
Adding to buying sentiment was data out of China showing
that the country's inflation had slowed sharply last month, raising the
prospect that the government could start to ease monetary policy.
International Monetary Fund Managing Director Christine
Lagarde said on Wednesday some Asian countries can ease monetary tightening
slightly, referring to economies that have been using extensive tightening to
fight inflation.
For China, however, "there is still scope for using
monetary policy to restrain credit growth," and fiscal policy is a more
appropriate lever to pull if the economy needs support, she said.
"(China's) fiscal policy is appropriately moving back
to balance. But if the growth outlook deteriorates significantly, it could
become the first line of defense, given ample fiscal space and capacity to
deploy resources quickly."
The Nikkei closed up 1.15% and the Hang Seng was last almost 2% firmer.
With risk back in vogue, European stock markets are likely
to start higher, with bunds and gilts seeing some losses.
Investors seem back in the mood for risk, and are expected
to bid European bourses higher amid signs of political progress in Italy and
Greece.
For Wednesday's opening, Cantor Index is calling the FTSE up
63 at 5630, the DAX up 98 at 6059, and the CAC up 33 at 3176.
"The hope will be that Italy can quickly gain a new government
with the stomach and the ability to implement major structural reforms,"
said Capital Economics. "But this alone won't solve Italy's woes. The
recent run of economic data suggests that Italy will soon fall back into
recession."
Meanwhile, Greek political leaders appeared to have clinched
a deal on a new prime minister on Tuesday, following two days of discussion over
who would lead the country and implement a new €130bn aid package.
An announcement is expected late on Wednesday, officials
said. Socialist Prime Minister George Papandreou told his cabinet on Tuesday
that he was close to a deal with opposition New Democracy party, and asked his
ministers to prepare resignation letters.
US stock futures are lower on Wednesday, after markets
advanced on Tuesday as equity investors viewed the planned resignation of
Italian Prime Minister Silvio Berlusconi as a step toward resolving the
country's part in the eurozone sovereign debt crisis.
