JSE higher as markets cheer ECB news

Johannesburg - The JSE was trading higher on Friday morning‚ buoyed by resources and platinum counters‚ with yesterday’s positive sentiment after the European Central Bank (ECB) bond-buying announcement extending into the local market today.

ECB president Mario Draghi said the bank would buy an unlimited amount of up to three-year sovereign bonds of eurozone countries‚ which would help to ease monetary woes in the eurozone. Interest rates were left unchanged at 0.75%.

At 9.42am‚ the JSE All Share [JSE:J203] index was up 0.23% at 35‚756.25 points‚ with resources up 1.44% and the platinum index gaining 1.02%.

Devin Shutte‚ market analyst at stockbrokerage Newstrading‚ notes that “European‚ Asian and our local markets are nicely in the green”‚ with a 4% rise in China’s Shanghai index partly ascribed to new infrastructure projects announced.

“The gold price has pulled back a bit but our gold counters are holding up well‚” Shutte said.

“Traders are positioning themselves ahead of the nonfarm payrolls print out of the US later today‚” he said.

At 09:42 the gold price was quoted at $1 695.45 per troy ounce after trading higher than $1 700 yesterday.

Asian markets were trading strong‚ with the Japanese Nikkei closing 2.20% higher and the Hang Seng index up 2.67%.

In Europe‚ the FTSE index was up 0.18% and the Paris CAC was 0.49% stronger.

RMB said in a morning note that “Super Mario” had delivered what was expected and global markets had rallied hard. “Most of the response has probably already been seen but the mood is still encouraging coming into the Joburg session‚” RMB said.

“The next big issue for the eurozone is next Wednesday’s German constitutional court decision on the validity of the European Stability Mechanism (ESM) bailout fund. If it goes well‚ it will be a major step in relieving European stress. If it goes badly‚ Europe risks will unravel no matter the ECB plan‚” the bank said.

“Today’s US nonfarm payroll figures take on more importance than normal‚ given speculation that the US Federal Reserve could introduce a third round of quantitative easing (QE3) next week.

“Consensus is for 125 000 jobs to have been created in August. QE3 will be highly likely if it is under 100 000‚ and unlikely if the numbers are above 200 000. Anything in-between is a flip of a coin‚” it said.